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<div type="image" title="In 2024, India has seen around $12.2 billion worth of IPOs, including mainboard and SMEs" msid="113878163" hostid="261" sizebytes="45300" caption="&amp;lt;p&amp;gt;In 2024, India has seen around $12.2 billion worth of IPOs, including mainboard and SMEs&amp;lt;/p&amp;gt;"></div> Missing some action, adrenaline rush, and thrill in your life? Are the good old, albeit mundane money investment avenues like mutual funds and fixed deposits not making the cut for you? Want to experience a heart-pounding, financial rollercoaster that will constantly keep you and your portfolio on tenterhooks? Well then, welcome to the world of initial public offers (IPOs), especially those brought to you by SMEs, or <keyword id="6375845" type="General" weightage="20" keywordseo="Small-and-Medium-Enterprises" source="Orion">small and medium enterprises</keyword>. Truth be told, <keyword id="19938687" type="General" weightage="20" keywordseo="sme" source="keywords">SME</keyword> IPOs have been all over the bourses this year. So far, 2024 has seen 206 SMEs debuting on both BSE and NSE, out of which 146 listed in gains and 46 listed in losses. Odds seem good, right? In contrast, the year has only seen 63 IPOs from the elder brother i.e. mainboard, only 48 of which managed to post any listing gains. And getting an allotment has also been a major uncertainty, given the unusually high demand this year. <h2 style="margin-bottom: 0.7em; line-height: 1.3; color: rgb(0, 0, 0); font-size: 24px; background: 0px 0px; text-rendering: optimizelegibility;">So, what's an <keyword id="5559702" type="General" weightage="100" keywordseo="SME-IPO" source="Orion">SME IPO</keyword>, you ask?</h2>Think of a mainboard company as Shah Rukh or Salman Khan—well-established, financially stable, strong legacy of profitability, and fairly well-known. On the other hand, SMEs are your Prateek Gandhi (Harshad Mehta, Scam 1992), Siddhant Chaturvedi (MC Sher, Gully Boy) or Avinash Tiwary (Majnu, Laila Majnu). While they are doing super well, they are yet to make it big like the Khans. They’re currently underdogs, lesser known, but who knows? They can be the next big thing in the future! And SME IPOs are getting a stellar reception. In 2023, 182 such IPOs had raised a substantial Rs 4,967 crore. In 2024, more than 200 companies have already raised over Rs 7,500 crore, and we have four months to go. This, with one quarter of the year still remaining. <div type="image" title="In 2024, India leads IPO activity in the Asia-Pacific region" height="900" width="1200" msid="113875643" hostid="261" caption="&amp;lt;p&amp;gt;In 2024, India leads IPO activity in the Asia-Pacific region&amp;lt;/p&amp;gt;"></div> But what does it take for a company to be classified as a small enterprise? The company has to have an annual turnover/income of up to Rs 50 crore, and for a medium enterprise to be called so, its annual income has to be up to Rs 250 crore. When such companies go public, in a bid to raise funds from investors and expand their operations, they launch an <keyword id="19898327" type="General" weightage="20" keywordseo="ipo" source="keywords">IPO</keyword>, but not on the main exchange, but separately, on NSE’s Emerge and BSE’s SME platform. As of September 2024, <keyword id="4484133" type="General" weightage="20" keywordseo="NSE-Emerge" source="Orion">NSE Emerge</keyword> has 147 listed participants, while <keyword id="1885131" type="General" weightage="20" keywordseo="BSE-SME" source="Orion">BSE SME</keyword> has 155 market makers. Mounting an SME’s IPO is comparatively less stringent than their mainboard counterparts, as far as regulations are concerned since their DRHPs (draft red herring prospectus) are not filed with SEBI. So, wouldn’t a lenient treatment make them inherently riskier? Why are they so appealing, you ask? <a href="https://www.businessinsider.in/stock-market/news/a-company-with-8-employees-looking-to-raise-12-crore-ended-up-getting-applications-worth-over-4700-crore/articleshow/112824522.cms">Delhi firm with just 8 employees seeks ₹12 crore via IPO, gets ₹4,700 crore worth of investor applications!</a> Well, for one, some of them have delivered exceptional returns—we’re talking 100%, 200%. Consider this—Owais Metal and Mineral Processing, which launched its IPO in February this year, delivered a whopping listing gain of 201%. Another SME, Maxposure, whose IPO was out in January 2024, had earned its investors listing gains worth 317.40%! Apparently, higher risks also mean higher returns, and also super high investment. Most SME IPOs need a minimum investment of Rs 1,00,000 or more, as opposed to mainboard IPOs, where you can buy one lot of shares for anywhere between Rs 14,000-15,000. Even the minimum trading lot size for SME shares is about 10,000. In short, you’d have to potentially empty your pockets to invest in an SME IPO. And still, there’s no guarantee that the listing will fill your wallets. For all you know, your pockets before and after the IPO is listed might stay the same - EMPTY! There's also the question of whether or not these SMEs are able to maintain their listing day mojo, or do they just fizzle out thereafter? Data from Prime Database highlights more instances of the latter. As of August 2024, about 166 SME IPOs had made it to the exchanges. Around 72 of them, or close to 50%, could not sustain their momentum going ahead, and were trading below their listing day prices. Consider this. The post listing gains of Medicamen Organics, whose IPO came out in June 2024, earned its investors massive listing gains of over 300%, by listing at Rs 137.85, significantly higher than its price issue price, which was set between Rs 32-34. But as of October 1, 2024, the stock was trading at Rs 64.2. Talk about falls. Additionally, risks of pump-and-dump, and illiquidity, among others makes SME IPOs dangerous See, you're largely venturing into unknown, pitch-dark territories, without much light to guide you. For starters, SME IPOs face less scrutiny from market watchdog SEBI. This also means they are able to list quickly, just 3-4 months. On the other hand, mainboard IPOs can take upto a year before they are cleared for listing. Also, there is far less information and disclosures available about their financials, fundamentals and performance to investors for making an informed decision, as compared to mainboard stocks. Then there’s the issue of illiquidity. Once purchased, you might find it hard to sell off your SME stocks, since they are not traded as frequently in the market, which means lower liquidity. Trivesh D, COO, Tradejini explains that liquidity is a major concern for such stocks. “These stocks typically have a smaller free float, and are traded in lots, which can lead to volatility and sharp price swings. This means it can be challenging for investors to buy or sell shares without significantly impacting prices. Additionally, speculative trading practices, like 'pump-and-dump' schemes, can inflate stock prices, leaving retail investors vulnerable to sudden drops”. Recently, SME IPOs have gained notoriety for price manipulation via showing fictitious sales and revenue in their books of accounts, selling of promoter holdings at inflated prices, and being the facade for many infamous pump and dump schemes. This is where select people create frenzy, or mass euphoria over a particular stock or company, causing its prices to soar, and then dumping them, or selling their shares at this massive price to make a killing! Infact, it's not just the promoters, but also the investment banks floating these IPOs. At present, SEBI is investigating around 6 investment banks which have allegedly charged SMEs a staggering 15% of funds raised via IPOs as fee, as opposed to the standard 1-3%. In March 2024, SEBI chairperson Madhabi Puri Buch had also highlighted witnessing signs of manipulation in the SME space. “We do see signs of manipulation in the SME segment. We are able to see certain patterns.” Buch had observed back then. Adds Kresha Gupta, Founder &amp; Director, StepTrade Share Services, “Investing in SME IPO comes with significant risks, despite their impressive returns in recent years. Limited participation from institutional investors and public in some SME IPOs also mean that those companies may lack the support and stability that comes with larger-scale investments” “Additionally, many SMEs may not have strong fundamentals to justify their valuations. High P/E ratios can be misleading, and while some IPOs have delivered impressive returns, they often come with significant volatility, continues D of Tradejini. <h2 style="box-sizing: border-box; border: 0px; outline: 0px; padding: 0px; margin: 0px 0px 0.7em; font-family: &quot;Open Sans&quot;, sans-serif; font-weight: 700; line-height: 1.3; color: rgb(0, 0, 0); font-size: 24px; list-style: none; background: 0px 0px; text-rendering: optimizelegibility; text-transform: none; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;">So, should I stay away?</h2>Yes, and No. Yes, if you don't want to do your homework of researching the company thoroughly beforehand. Anand K. Rathi, Co-Founder of MIRA Money suggests asking a couple of questions before investing your hard earned money: <ul><li>What is the company's financial performance over the past 3-4 years?</li><li>What is the company's governance structure?</li><li>Is the financial success driven by the IPO, or is it a result of consistent performance?</li><li>Does the company have what it takes to scale its operations to the next level?</li><li>Are the company’s promoters trustworthy, capable and experienced?</li><li>What is the level of participation by large, institutional investors?</li></ul> But staying away completely? Not necessary. Gupta adds that retail investors, in particular, should avoid viewing SME IPOs as quick money-makers based on their short-term performance, as this can certainly lead to poor investment decisions. “To mitigate risks, investors should always focus on long-term fundamentals rather than just short-term price movements. Key indicators include the participation of institutional investors like DIIs and FIIs. This often signals confidence in the stock”, she continues. A red flag you should look out for is if a company is only offering OFS, or Offer for Sale. This can indicate early investors looking to exit, potentially signaling weaker future growth. That's why it is better to look for companies which are raising capital for expansion purposes. This is a sign of healthy business growth prospects and improving fundamentals. In conclusion, backing the underdog, or SMEs, is not a bad proposition, but not without its risks. Investing in SME IPOs is like riding a unicorn—but you don't know whether you're riding it to rags or riches! So, take your pick.

SIMPLY PUT: Why investing in SME IPOs should not be on top of your adventure to-do list!

Missing some action, adrenaline rush, and thrill in your life? Are the good old, albeit mundane money investment avenues like mutual funds and fixed deposits not making the cut for you? Want to experience a heart-pounding, financial rollercoaster that will constantly keep you and your portfolio on tenterhooks? Well then, welcome to the world of initial public offers (IPOs), especially those brought to you by SMEs, or <keyword id="6375845" type="General" weightage="20" keywordseo="Small-and-Medium-Enterprises" source="Orion">small and medium enterprises</keyword>. Truth be told, <keyword id="3704207" type="General" weightage="100" keywordseo="SME-IPOs" source="Orion">SME IPOs</keyword> have been all over the bourses this year. So far, 2024 has seen 206 SMEs debuting on both BSE and NSE, out of which 146 listed in gains and 46 listed in losses. Odds seem good, right? In contrast, the year has only seen 63 IPOs from the elder brother i.e. mainboard, only 48 of which managed to post any listing gains. And getting an allotment has also been a major uncertainty, given the unusually high demand this year. <h2>So, what's an SME <keyword id="6354763" type="General" weightage="20" keywordseo="IPO" source="Orion">IPO</keyword>, you ask?</h2>Think of a mainboard company as Shah Rukh or Salman Khan—well-established, financially stable, strong legacy of profitability, and fairly well-known. On the other hand, SMEs are your Prateek Gandhi (Harshad Mehta, Scam 1992), Siddhant Chaturvedi (MC Sher, Gully Boy) or Avinash Tiwary (Majnu, Laila Majnu). While they are doing super well, they are yet to make it big like the Khans. They’re currently underdogs, lesser known, but who knows? They can be the next big thing in the future! And SME IPOs are getting a stellar reception. In 2023, 182 such IPOs had raised a substantial Rs 4,967 crore. In 2024, more than 200 companies have already raised over Rs 7,500 crore, and we have four months to go. This, with one quarter of the year still remaining. <div type="image" title="In 2024, India leads IPO activity in the Asia-Pacific region" height="900" width="1200" msid="113875643" hostid="261" caption="&amp;lt;p&amp;gt;In 2024, India leads IPO activity in the Asia-Pacific region&amp;lt;/p&amp;gt;"></div> But what does it take for a company to be classified as a small enterprise? The company has to have an annual turnover/income of up to Rs 50 crore, and for a medium enterprise to be called so, its annual income has to be up to Rs 250 crore. When such companies go public, in a bid to raise funds from investors and expand their operations, they launch an IPO, but not on the main exchange, but separately, on NSE’s Emerge and BSE’s SME platform. As of September 2024, <keyword id="4484133" type="General" weightage="20" keywordseo="NSE-Emerge" source="Orion">NSE Emerge</keyword> has 147 listed participants, while <keyword id="1885131" type="General" weightage="20" keywordseo="BSE-SME" source="Orion">BSE SME</keyword> has 155 market makers. Mounting an SME’s IPO is comparatively less stringent than their mainboard counterparts, as far as regulations are concerned since their DRHPs (draft <keyword id="12225712" type="General" weightage="20" keywordseo="Red-herring-prospectus" source="Orion">red herring prospectus</keyword>) are not filed with SEBI. So, wouldn’t a lenient treatment make them inherently riskier? Why are they so appealing, you ask? <a href="https://www.businessinsider.in/stock-market/news/a-company-with-8-employees-looking-to-raise-12-crore-ended-up-getting-applications-worth-over-4700-crore/articleshow/112824522.cms">Delhi firm with just 8 employees seeks ₹12 crore via IPO, gets ₹4,700 crore worth of investor applications!</a> Well, for one, some of them have delivered exceptional returns—we’re talking 100%, 200%. Consider this—Owais Metal and Mineral Processing, which launched its IPO in February this year, delivered a whopping listing gain of 201%. Another SME, Maxposure, whose IPO was out in January 2024, had earned its investors listing gains worth 317.40%! Apparently, higher risks also mean higher returns, and also super high investment. Most SME IPOs need a minimum investment of Rs 1,00,000 or more, as opposed to mainboard IPOs, where you can buy one lot of shares for anywhere between Rs 14,000-15,000. Even the minimum trading lot size for SME shares is about 10,000. In short, you’d have to potentially empty your pockets to invest in an SME IPO. And still, there’s no guarantee that the listing will fill your wallets. For all you know, your pockets before and after the IPO is listed might stay the same - EMPTY! There's also the question of whether or not these SMEs are able to maintain their listing day mojo, or do they just fizzle out thereafter? Data from Prime Database highlights more instances of the latter. As of August 2024, about 166 SME IPOs had made it to the exchanges. Around 72 of them, or close to 50%, could not sustain their momentum going ahead, and were trading below their listing day prices. Consider this. The post listing gains of Medicamen Organics, whose IPO came out in June 2024, earned its investors massive listing gains of over 300%, by listing at Rs 137.85, significantly higher than its price issue price, which was set between Rs 32-34. But as of October 1, 2024, the stock was trading at Rs 64.2. Talk about falls. Additionally, risks of pump-and-dump, and illiquidity, among others makes SME IPOs dangerous See, you're largely venturing into unknown, pitch-dark territories, without much light to guide you. For starters, SME IPOs face less scrutiny from market watchdog SEBI. This also means they are able to list quickly, just 3-4 months. On the other hand, mainboard IPOs can take upto a year before they are cleared for listing. Also, there is far less information and disclosures available about their financials, fundamentals and performance to investors for making an informed decision, as compared to mainboard stocks. Then there’s the issue of illiquidity. Once purchased, you might find it hard to sell off your SME stocks, since they are not traded as frequently in the market, which means lower liquidity. Trivesh D, COO, Tradejini explains that liquidity is a major concern for such stocks. “These stocks typically have a smaller free float, and are traded in lots, which can lead to volatility and sharp price swings. This means it can be challenging for investors to buy or sell shares without significantly impacting prices. Additionally, speculative trading practices, like 'pump-and-dump' schemes, can inflate stock prices, leaving retail investors vulnerable to sudden drops”. Recently, SME IPOs have gained notoriety for price manipulation via showing fictitious sales and revenue in their books of accounts, selling of promoter holdings at inflated prices, and being the facade for many infamous <keyword id="10663340" type="General" weightage="20" keywordseo="Pump-and-Dump" source="Orion">pump and dump</keyword> schemes. This is where select people create frenzy, or mass euphoria over a particular stock or company, causing its prices to soar, and then dumping them, or selling their shares at this massive price to make a killing! Infact, it's not just the promoters, but also the investment banks floating these IPOs. At present, SEBI is investigating around 6 investment banks which have allegedly charged SMEs a staggering 15% of funds raised via IPOs as fee, as opposed to the standard 1-3%. In March 2024, SEBI chairperson Madhabi Puri Buch had also highlighted witnessing signs of manipulation in the SME space. “We do see signs of manipulation in the SME segment. We are able to see certain patterns.” Buch had observed back then. Adds Kresha Gupta, Founder &amp; Director, StepTrade Share Services, “Investing in SME IPO comes with significant risks, despite their impressive returns in recent years. Limited participation from institutional investors and public in some SME IPOs also mean that those companies may lack the support and stability that comes with larger-scale investments” “Additionally, many SMEs may not have strong fundamentals to justify their valuations. High P/E ratios can be misleading, and while some IPOs have delivered impressive returns, they often come with significant volatility, continues D of Tradejini. <h2>So, should I stay away? </h2>Yes, and No. Yes, if you don't want to do your homework of researching the company thoroughly beforehand. Anand K. Rathi, Co-Founder of MIRA Money suggests asking a couple of questions before investing your hard earned money: <ul><li>What is the company's financial performance over the past 3-4 years?</li><li>What is the company's governance structure?</li><li>Is the financial success driven by the IPO, or is it a result of consistent performance?</li><li>Does the company have what it takes to scale its operations to the next level?</li><li>Are the company’s promoters trustworthy, capable and experienced?</li><li>What is the level of participation by large, institutional investors?</li></ul> But staying away completely? Not necessary. Gupta adds that retail investors, in particular, should avoid viewing SME IPOs as quick money-makers based on their short-term performance, as this can certainly lead to poor investment decisions. “To mitigate risks, investors should always focus on long-term fundamentals rather than just short-term price movements. Key indicators include the participation of institutional investors like DIIs and FIIs. This often signals confidence in the stock”, she continues. A red flag you should look out for is if a company is only offering OFS, or Offer for Sale. This can indicate early investors looking to exit, potentially signaling weaker future growth. That's why it is better to look for companies which are raising capital for expansion purposes. This is a sign of healthy business growth prospects and improving fundamentals. In conclusion, backing the underdog, or SMEs, is not a bad proposition, but not without its risks. Investing in SME IPOs is like riding a unicorn—but you don't know whether you're riding it to rags or riches! So, take your pick.

Why investing in SME IPOs should not be on top of your adventure to-do list!

<ul><li>The overall credit demand stands at $220 billion, yet only $165 billion is serviceable, says a report by Redseer and GetVantage.</li><li>Formal lending systems like banks have only been able to service 30% of the overall credit demand.</li><li>Alternate finance systems like recurring-revenue advances and trade receivable financing have the potential to double their share in five years. </li></ul>Indian digital small and medium sized enterprises (SMEs) are on a growth path but suffer from a working capital deficit of around $112 billion — as only $53 billion was injected via various channels. As per a report by Redseer and GetVantage, the overall credit demand stands at $220 billion, yet only $165 billion is serviceable. “Small businesses account for 90% of credit demand but continue to struggle to raise capital, owing to poor business metrics, limited assets, and uncertain growth projections. If the current economic and regulatory climate continues, this gap is likely to widen significantly over the next five years,” said Kanishka Mohan, partner at Redseer. Moreso, as more businesses go digital along with growth in new-age businesses, the demand for credit will only grow. The report estimates that in the next five years, as the number of digital SMEs doubles, the demand for credit is expected to cross $570 billion. Advantage Alt-Fi Formal lending systems like banks have only been able to service 30% of the overall credit demand. Lack of collateral and clear documentation has always been a hindrance for traditional lenders such as commercial banks to provide adequate capital to SMEs. That presents an unprecedented opportunity for alternate-financing platforms, NBFCs and traditional financial lenders (Trad-Fi) like banks to collaborate and catalyze economic growth by prioritizing compliance, governance, inclusion and innovation, opines Bhavik Vasa, founder &amp; CEO of GetVantage. Alternate finance systems include third-party lenders such as revenue-based financing platforms, recurring-revenue advances and trade receivable financing etc. Alternate-finance provides access and flexibility which make these quasi-equity solutions ideal for SMEs. “India is a nation of small businesses, and modern businesses in India deserve modern capital solutions that are fair, accessible, and flexible. Alternate-financing has a vital role to play in extending the limited reach of traditional lenders to serve millions of new-economy businesses and emerging sectors,” says Vasa. At present, the share of alternate finance is around 5%, which Redseer estimates can double to reach to around 11% in the next five years. India has 64 million micro, small, and medium sized enterprises (MSMEs), which contribute to 30% of the nation’s GDP. The sector which is recognized as a crucial growth engine is riddled with challenges such as limited digitization and strained access to capital. Redseer says that only 12% or 7.7 million MSMEs in India are digitized. Yet, businesses that have been able to shift their operations online partly have been able to achieve scale as they could take advantage of new economic opportunities and cost efficiencies.

India’s small digital businesses have a capital problem and this will only grow

<keyword id="19895282" type="General" weightage="20" keywordseo="mumbai" source="keywords">Mumbai</keyword>, Sebi chairperson <keyword id="19922107" type="General" weightage="20" keywordseo="madhabi-puri-buch" source="keywords">Madhabi Puri Buch</keyword> on Monday said the capital markets regulator is seeing "signs" of price manipulation in the small and medium enterprises (<keyword id="19938687" type="General" weightage="20" keywordseo="sme" source="keywords">SME</keyword>) segment. The manipulation is both at the <keyword id="19913114" type="General" weightage="20" keywordseo="initial-public-offering" source="keywords">Initial Public Offering</keyword> (IPO) and trading, <keyword id="20908618" type="General" weightage="20" keywordseo="buch" source="keywords">Buch</keyword> said, advising caution to investors. "We do see the signs (of price manipulation), we have the technology to do it. We are able to see certain patterns. I'd say it is still on the kitchen table, it's not yet gone into the oven," Buch said, speaking to women journalists on the sidelines of a conference here. The capital markets regulator is still working with advisors to understand all the dimensions and analyse the data, she said, adding that if it finds some malpractices the next step may be to issue a public consultation on it. She said the investors need to understand that the SME segment is different from the main board and it is necessary for Sebi to underline the same in terms of the rules on disclosures which are made to investors. Regulations governing the SME segment, the disclosures, and therefore, the nature of risk are all different, she added.

Seeing signs of price manipulation in SME segment: Madhabi Puri Buch

<ul><li>MSMEs hold immense potential in supporting India’s ambitious vision of a $40 trillion economy by 2047, says industry body Assocham.</li><li>Banks can fund <keyword id="6358354" type="General" weightage="20" keywordseo="msme" source="Orion">MSME</keyword> working capital requirements against <keyword id="4572080" type="General" weightage="20" keywordseo="GST-filings" source="Orion">GST filings</keyword>, suggests Assocham.</li><li>Another suggestion is to come up with a similar structure of REITs and InVITs, an investment trust that lends specifically to MSMEs via pooling.</li></ul>The micro, small and medium enterprises (MSME) sector has played a meaningful role in India’s growth. The sector holds immense potential in supporting India’s ambitious vision of a $40 trillion economy by 2047, says a report by industry body Assocham. However, the real struggle for small businesses lies in fundraising for future growth. The report highlighted challenges faced by MSMEs in terms of fundraising and recommended ways to solve the problem. “An April 2022 report by the Standing Committee on Finance estimated the credit gap in the MSME sector to the tune of ₹20-25 trillion. Therefore, funding via alternative sources apart from bank credit needs to be augmented for the MSME segment,” said the report. Given that nearly 60% of MSMEs raise funds through informal sources, formalization of the sector is necessary to facilitate growth, the industry body says. “To this end, banks could fund working capital requirements against GST filings, which are more reliable quantitatively, as compared to collateralized loans. This would not only enable MSMEs easy access to funds but also spur formalization through GST registrations,” Assocham said. Another suggestion is to come up with a similar structure of real estate investment trusts (REITs) and infrastructure investment trusts (InVITs). The industry body says that an investment trust that lends specifically to MSMEs via pooling – can be created. Disclosures a challenge with SME IPOs Apart from credit, small businesses also find it tough to raise equity. Raising funds by going public via <keyword id="5559702" type="General" weightage="20" keywordseo="SME-IPO" source="Orion">SME IPO</keyword> is also a challenge due to strict disclosure requirements. BSE SME Exchange was launched in 2012 while NSE launched SME Emerge platform and Nifty SME EMERGE Index in 2017 to encourage MSME companies to get public. “In November 2021, BSE also collaborated with the All-India MSME Association (AIMA) to encourage and promote the listing of MSMEs and start-ups through the SME platform. Although these steps helped overall resource mobilization in the initial years, evident from the gradual rise in number of MSMEs that have moved to the main board, we have not seen equity emerge as a source of MSME financing in a big way,” said the report. While tough disclosure remains a challenge, data shows that SME IPOs have witnessed good growth with hundreds of companies launching their issues with <a href="https://www.businessinsider.in/stock-market/news/small-is-the-new-big-sme-ipos-double-in-2022-while-mainboard-ipos-halve/articleshow/96618323.cms#:~:text=mainboard%20IPOs%20halve-,Small%20is%20the%20new%20big%3A%20SME%20IPOs%20double,2022%2C%20while%20mainboard%20IPOs%20halve&amp;text=In%202022%2C%20108%20SME%20IPOs,age%20technology%20IPOs%2C%20last%20year.">stellar performances</a>. In 2022, 108 SME IPOs were launched, as against 60 the year before. A net worth between ₹1 crore and ₹25 crore is one of the listing requirements for SME IPOs on BSE, as per BSE Stock Exchange. The minimum investment amount for an SME IPOs is quite large compared to regular IPOs – ₹1 lakh for SME IPOs versus nearly ₹15,000 for regular IPOs. The report also revealed that the Department for Promotion of Industry and Internal Trade (DPIIT) is in process of finalizing the new industrial policy, which amongst other things, encourages MSMEs to choose the corporate bond market. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/mutual-funds-raise-bets-on-mid-small-cap-stocks-amid-volatile-markets/articleshow/98516460.cms">Mutual funds raise bets on mid &amp; small-cap stocks amid volatile markets</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/fpis-continue-to-be-bearish-on-oil-gas-power-stocks-in-february-offload-equities-worth-7821-crore-in-the-two-sectors/articleshow/98511897.cms">FPIs continue to be bearish on oil &amp; gas, power stocks in February, offload equities worth ₹7,821 crore in the two sectors</a>

REIT-like structures, loans against GST filings can help solve MSME fundraising problems: Assocham

Financial services company <keyword id="7349800" type="UNKNOWN" weightage="20" keywordseo="bharatpe">BharatPe</keyword> on Monday said it has raised ₹50 crore in debt from <keyword id="6254083" type="UNKNOWN" weightage="20" keywordseo="Northern-Arc-Capital">Northern Arc Capital</keyword>, one of the leading digital debt finance platforms. This is the sixth round of debt financing in 2021, the company said. In January, the company had raised ₹200 crore from three top debt companies in the country -- Alteria Capital, <keyword id="2809652" type="COMPANY" weightage="20" keywordseo="InnoVen-Capital">InnoVen Capital</keyword> and <keyword id="2694863" type="COMPANY" weightage="20" keywordseo="Trifecta-Capital">Trifecta Capital</keyword>, having later raised additional capital from <keyword id="6653" type="COMPANY" weightage="20" keywordseo="ICICI-bank">ICICI Bank</keyword> and <keyword id="6355975" type="COMPANY" weightage="20" keywordseo="axis-bank">Axis Bank</keyword>. "We have considerably ramped up our lending business in the last year and have set an ambitious target of facilitating disbursals to the tune of $1 billion to more than 10 lakh merchants by the end of current fiscal (FY22)," said Suhail Sameer, Group President, BharatPe. "We are excited about our latest capital raise from Northern Arc and are confident that, together, we will be able to transform Bharat and serve the needs of the underserved businesses in India," he added. The fintech company has already facilitated disbursals of over ₹1,600 crore to more than 2 lakh merchants since the launch of the lending vertical. "Northern Arc has continually worked towards extending credit to like-minded organisations such as BharatPe that enable financial access to small businesses and merchants across the country," said Bama Balakrishnan, <keyword id="6423421" type="COMPANY" weightage="20" keywordseo="coo">COO</keyword>, Northern Arc. Northern Arc has directly disbursed more than ₹3,500 crore over the last financial year to MSMEs, households, financial institutions and mid-market corporates. SEE ALSO: <a href="https://www.businessinsider.in/business/news/this-ev-startup-mobycy-went-from-solving-last-mile-commute-to-delivery/articleshow/82513392.cms">It took one pivot and five years for this EV startup founder to hit the sweet spot for business in India</a> <a href="https://www.businessinsider.in/tech/apps/news/clubhouse-android-download-release-date-beta-version/articleshow/82515109.cms">Clubhouse for Android finally launched as downloads and hype take a plunge</a> <a href="https://www.businessinsider.in/finance/banks/news/bandhan-bank-share-price-falls-after-reporting-an-80-fall-in-its-net-profit/articleshow/82516642.cms">Bandhan Bank falls 4% after reporting an 80% fall in its net profit – positive market trends help it bounce back into the green</a>

SME lending startup BharatPe raises ₹50 crore in debt from Northern Arc Capital

The growth momentum picked up by the manufacturing sector in the last few months is likely to be sustained for the next six-to-nine months, <keyword id="15451445" type="General" weightage="50" keywordseo="quarterly-survey-on-manufacturing" source="Orion">Quarterly Survey on Manufacturing</keyword> conducted by industry body <keyword id="6355001" type="General" weightage="100" keywordseo="ficci" source="Orion">FICCI</keyword> revealed. The latest Survey reveals that after experiencing a revival of the Indian economy in the FY 2021-22, the momentum of growth continued in subsequent quarters of Q1 (April-June 2022-23) and Q2 July-Sept (2022-23) with over 61 per cent of respondents reported higher production levels in Q2 (July-September 2022-23). This is significantly more than the percentage of respondents experiencing higher growth in Q2 of the last few years including pre-Covid years too. This assessment is also reflected in order books as 54 per cent of the respondents in Q2 (July-September 2022-23) that had a higher number of orders. FICCI assessed the sentiments of manufacturers for Q2 July-September (2022-23) for ten major sectors namely Automotive and Auto Components, Capital Goods, <keyword id="6378916" type="General" weightage="50" keywordseo="cement" source="Orion">Cement</keyword>, Chemicals Fertilizers and Pharmaceuticals, Electronics, <keyword id="655658" type="General" weightage="80" keywordseo="machine-tools" source="Orion">Machine Tools</keyword>, Metal and Metal Products, Paper Products, Textiles, Textile Machinery and Miscellaneous. Responses have been drawn from over 300 manufacturing units from both large and <keyword id="18173" type="General" weightage="50" keywordseo="sme" source="Orion">SME</keyword> segments with a combined annual turnover of over 2.8 lakh crores. Capacity Addition and Utilization: The existing average capacity utilization in manufacturing is over 70 per cent, which reflects sustained economic activity in the sector. The future investment outlook also slightly improved as compared to the previous quarter as close to 40 per cent of respondents reported plans for capacity additions in the next six months, by as much as over 15 per cent on average. Global economic uncertainty caused by the Russia-Ukraine War and increasing cases of various mutations of COVID virus worldwide have accentuated the volatilities impacting the major economies. High raw material prices, increased cost of finance, cumbersome regulations, and clearances, shortage of working capital, high logistics cost due to rising fuel prices and blocked shipping lanes, low domestic and global demand, excess capacities due to the high volume of cheap imports into India, unstable market, high power tariff, shortage of skilled labor, highly volatile prices of certain metals, etc. and other supply chain disruptions are some of the major constraints which are affecting expansion plans of the respondents. Inventories: Over 87 per cent of the respondents had either more or the same level of inventory in Q2 July-September 2022-23, which is the same as compared to that of the previous quarter, where around 86.19 per cent of respondents expected either more or the same level of inventory. Exports: The outlook for exports seems to be positive as over 42 per cent of the respondents expect a high increase in exports in Q2 2022-23 as compared to the Q2 July-September of FY 2021-22. Hiring: Hiring through positive remains below potential as 36 per cent of the respondents in Q2 2022-23 were looking at hiring additional workforce in the next three months. Interest Rate: Overall, the average interest rate paid by the manufacturers has decreased to 8.37 per cent per annum as against 9.3 per cent during the last quarter and the highest rate at which a loan has been raised is 13.5 per cent. High lending rates were reported by around 62 per cent of the respondents. Production Cost: The cost of production as a percentage of sales for manufacturers in the survey has risen for 94 per cent of respondents in the quarter. Reduced availability and high raw material prices especially that of steel, increased transportation, logistics, and freight cost, and a rise in the prices of crude oil and fuel have been the main contributors to the increasing cost of production. Other factors responsible for escalating production costs include enhanced labour costs, high cost of carrying inventory, and fluctuation in the foreign exchange rate. Workforce Availability: Most sectors have a sufficient labour force engaged in their operations and are not facing a labour shortage at factories. While 81 per cent of the respondents mentioned that they do not have any issues with workforce availability, the remaining 19 per cent feel that there is still a lack of skilled workforce available in their sector. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/indian-e-rupee-to-boost-digital-payments-sans-bank-accounts-say-industry-stakeholders/articleshow/95332849.cms">Indian e-rupee to boost digital payments sans bank accounts, say industry stakeholders</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/sensex-rises-over-360-pts-to-scale-61k-level-in-early-trade-nifty-above-18220/articleshow/95348184.cms">Sensex rises over 360 pts to scale 61k-level in early trade; Nifty above 18,220</a>

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SME lending startup BharatPe raises ₹50 crore in debt from Northern Arc Capital

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Manufacturing sector's growth momentum to sustain for 6-9 months: FICCI

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