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Two Indian companies on the London AIM raised twice the amount of money raised by 40 Indian companies which listed on the Indian small and medium enterprises (SME) platforms in 2014. E-commerce firm Koovs and software company IMImobile together raised $88 million through their initial public offering (IPOs) on the London Stock Exchange’s SME platform, AIM, data from the exchange showed.
According to Prime Database, 40 companies on the Indian SME platforms of both the National Stock Exchange (NSE) and the BSE collectively raised $43.84 million. According to merchant bankers, weak primary market demand, the small-size of the issues, and the absence of big-ticket institutional investors have been the main reason for the difference in fund-raising.
“Generally, the market conditions have not been good. The other thing is that the issue-size of Rs 25-35 crore keeps bigger players such as banks, foreign institutions and domestic players such as mutual funds away from SME issues. So, the fund-raising is naturally at a much smaller scale compared to the international market,” said Uday Patil, director (investment banking), Keynote Corporate Services.
The difference in fund-raising by the Indian companies was attributed to the presence of big-ticket investors on the AIM, compared to the smaller high net-worth individuals and some venture funds and angel investors, said merchant bankers. Further, the Indian SME platform is only three years old, while the AIM has existed for about 20 years.
“Indian SME Exchanges are relatively newer compared to the AIM of London. AIM has been in existence for about 20 years and is approximately 50 times bigger in market cap than the Indian SME Exchanges. Basic listing framework at Indian SME Exchanges with requirements such as lot size of Rs 1 lakh, minimum public shareholding of 25 per cent is perceived as stricter compared to AIM," said Mahavir Lunawat, group managing director, Pantomath Advisory Services Group.
In the 20 years of its existence, the London AIM has 1,104 companies listed on it. Of these, 219 are international companies while the rest are UK-based. In 2014, as many as 118 new companies were listed on the platform, of which 23 were international firms raising $4 billion. A total of 22 Indian companies are listed on the AIM.
Since its inception in March 2012, eighty-two companies have listed on the BSE SME platform totalling a market-cap of Rs 8,507 crore.
Of these, 29 companies are actively traded. On NSE Emerge, the NSE’s SME platform, six companies have listed since its introduction in September 2012. The SME platform is a hard-sell, according to industry players, as very few investors express an interest in the platform. The minimum lot size of Rs 1 lakh keeps the retail participants away, while the small issue size keeps the larger investors away, they said.
On an average, an SME IPO receives anywhere between 200 and 300 applications. Analysts said AIM would attract much more savvy institutional investors who are well aware of the risks involved in investing in the smaller, growing companies.
According to Prime Database, 40 companies on the Indian SME platforms of both the National Stock Exchange (NSE) and the BSE collectively raised $43.84 million. According to merchant bankers, weak primary market demand, the small-size of the issues, and the absence of big-ticket institutional investors have been the main reason for the difference in fund-raising.
“Generally, the market conditions have not been good. The other thing is that the issue-size of Rs 25-35 crore keeps bigger players such as banks, foreign institutions and domestic players such as mutual funds away from SME issues. So, the fund-raising is naturally at a much smaller scale compared to the international market,” said Uday Patil, director (investment banking), Keynote Corporate Services.
The difference in fund-raising by the Indian companies was attributed to the presence of big-ticket investors on the AIM, compared to the smaller high net-worth individuals and some venture funds and angel investors, said merchant bankers. Further, the Indian SME platform is only three years old, while the AIM has existed for about 20 years.
“Indian SME Exchanges are relatively newer compared to the AIM of London. AIM has been in existence for about 20 years and is approximately 50 times bigger in market cap than the Indian SME Exchanges. Basic listing framework at Indian SME Exchanges with requirements such as lot size of Rs 1 lakh, minimum public shareholding of 25 per cent is perceived as stricter compared to AIM," said Mahavir Lunawat, group managing director, Pantomath Advisory Services Group.
In the 20 years of its existence, the London AIM has 1,104 companies listed on it. Of these, 219 are international companies while the rest are UK-based. In 2014, as many as 118 new companies were listed on the platform, of which 23 were international firms raising $4 billion. A total of 22 Indian companies are listed on the AIM.
Since its inception in March 2012, eighty-two companies have listed on the BSE SME platform totalling a market-cap of Rs 8,507 crore.
Of these, 29 companies are actively traded. On NSE Emerge, the NSE’s SME platform, six companies have listed since its introduction in September 2012. The SME platform is a hard-sell, according to industry players, as very few investors express an interest in the platform. The minimum lot size of Rs 1 lakh keeps the retail participants away, while the small issue size keeps the larger investors away, they said.
On an average, an SME IPO receives anywhere between 200 and 300 applications. Analysts said AIM would attract much more savvy institutional investors who are well aware of the risks involved in investing in the smaller, growing companies.
Further, poor liquidity on these platforms keeps big-ticket institutional investors away, merchant bankers said. With fewer savvy investors, the regulator is forced to keep a tighter check on the trading on these platforms which further restricts institutional participation, they added.
However, Industry players said that the performance of Indian SMEs in the limited period of three years has been encouraging for other companies wanting to list on the platform.
