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Less-stringent SME listing norms has made companies choose BSE over the NSE. The BSE SME platform has seen ten times more small and medium enterprises (SME) being listed as compared to the NSE Emerge platform. So far, 34 companies have listed on the BSE SME platform, while only three companies have listed on the NSE.
Investment bankers said that listing norms on the BSE were less-time consuming than the NSE which has a much more detailed selection process.
“On the BSE, the entire process of listing a SME takes about six months while on the NSE it could be longer. NSE has appointed external agencies to look into the companies’ financials along with other due-diligence that the exchange itself,” said an investment banker who has handled SME issues for both the exchanges.
Industry officials said that while most companies preferred the BSE, there were some which specifically asked to be listed on the NSE.
Sebi, in an attempt, to make it easier for the small and medium-sized companies to raise capital had laid down easier initial public offer (IPO) listing norms. At present, companies do not need regulatory approval for listing on the exchanges. The exchanges can provide an in-principle approval to the companies after having conducted the required due-diligence and background checks of the companies.
“BSE does the vetting of the documents and draft red herring prospectus submitted by the merchant banker, does the site visit and also takes the interview of the promoters and accordingly gives the recommendation to Internal Listing committee. On the basis of the recommendation of the Listing Advisory Committee and the documents submitted by the company, Internal Listing Committee gives in-principle approval to company for going to the public for raising the funds,” said a spokesperson for the BSE.
The BSE also publishes research report on these companies done by independent research and rating companies, said the spokesperson.
An NSE spokesperson said that the companies looking to list are asked to lay down a concrete plan on how the proceeds of the issue will be laid out. “Companies are also encouraged to lay out a concrete plan, on what they will use the finances for, if they go in for an IPO. Approvals are given to the companies, after the listing team is fully satisfied with their credentials. Diligence of the companies is also done by third party auditors,” the spokesperson said.
The BSE SME platform was launched in March of 2012 while the NSE Emerge platform was set-up in September 2012.
Earlier this year, in his Budget announcement, the finance minister P Chidambaram had said that SME could also list without an IPO on the exchange platforms. However, the norms for the same are still awaited.
