For small and medium enterprises (SMEs) looking to list on the stock exchanges, there was no better year than 2023.
In the current calendar year till September, as many as 135 SMEs launched their initial public offers (IPOs) while collectively raising nearly Rs 3,500 crore—a record in terms of cumulative fund raising in a single calendar year.
The previous high was Rs 2,287 crore that was raised through 141 SME public issues in 2018.
While there is significant traction visible in the SME IPO arena with most issues seeing huge oversubscription and listing gains as well, there is another trend that has caught everyone’s attention—a trend that is, in many ways, quite worrisome as well.
An analysis of the anchor allotments of various SME IPOs shows that there is just a small pool of entities—both, domestic and foreign—that features regularly in the list of anchor investors.
Data from Prime Database, a primary market tracker, shows that entities like Rajasthan Global Securities, Chhattisgarh Investments, LRSD Securities, Negen Undiscovered Value Fund, Moneywise Financial Services, Bengal Finance & Investment, and Authum Investment & Infrastructure are part of the anchor allotments in many SME IPOs in the recent past.
To be sure, there is no regulatory issue or violation in bidding for the anchor portion of shares in an IPO but when the same set of investors feature regularly in many IPOs, it does raise concerns especially when market participants say that the SME platforms are maturing and attracting newer and bigger investors.
Incidentally, both, BSE and the National Stock Exchange (NSE), launched their dedicated platforms for SME IPOs in 2012.
Meanwhile, the trend is no different when it comes to foreign portfolio investors (FPIs).
Foreign investors like Saint Capital Fund, Meru Investment Fund PCC-Cell I, Zinnia Global Fund PCC-Cell Dewcap Fund, Nav Capital VCC-Nav Capital Emerging Star Fund, Maven India Fund, and AG Dynamic Funds seem to be the most bullish on Indian SMEs.
Further, amongst the community of venture capital funds, entities like India Ahead Venture Fund, Neomile Growth Fund-Series I, VPK Global Ventures Fund-Scheme I are betting big on the Indian listed SME segment.
These trends assume further significance as the current year has seen some SME IPOs register unusually high levels in terms of oversubscription and listing gains.
Last month, the IPO of Kahan Packaging was subscribed more than 700 times while there have been at least four other SME IPOs that saw subscription in excess of 300 times.
Similarly, in terms of listing gains as well, there have been many that more than doubled on the day of their debut.
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