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SME IPOs surge in 2023, fuelled by HNIs and Positive Market Sentiment
Industry News- Oct 23,23
This heightened interest has led to 139 SMEs raising a substantial Rs 3,540 crore through IPOs up to October 20, outperforming the entire year of 2022.
The allure of small and medium enterprise (SME) initial public offerings (IPOs) has grown significantly in 2023, thanks to active involvement from family offices and high-net-worth individuals (HNIs), coupled with ample market liquidity and a positive investor sentiment. This heightened interest has led to 139 SMEs raising a substantial Rs 3,540 crore through IPOs up to October 20, outperforming the entire year of 2022, where 109 companies garnered Rs 1,875 crore in total, according to data from primedatabase.com.
Industry experts predict that the favourable fundraising environment for SME IPOs will continue. Factors such as sector-specific growth potential, market liquidity, investor confidence, and potential regulatory shifts are pivotal in shaping this trend. Abhishek Jain, Head of Research at Arihant Capital Markets Ltd, emphasised that the robust fundraising momentum is expected to persist due to the convergence of these influential factors.
The SME IPO landscape has seen a diverse array of companies making their debut on platforms like BSE SME and NSE Emerge. These companies span various sectors including IT, FMCG, automotive components, pharma, infrastructure, advertising, and hospitality. The funds raised through these IPOs have been earmarked for expansion initiatives, supporting working capital needs, and retiring debt, driving the surge in fundraising activities.
The remarkable uptick in SME fundraising through IPOs this year can be attributed to the significant influx of capital from family offices and HNIs into the SME market, as noted by Jain. Market dynamics, characterised by upward market movements, strong liquidity, and businesses scaling up operations, have created a demand for capital. Additionally, the trend of investors unlocking value and exiting through the offer for sale route has further fuelled the demand for SME IPOs.
BSE and NSE, recognising this demand, launched SME platforms in 2012, making them the exclusive bourses offering such a segment in the country. These platforms have provided SMEs with invaluable opportunities to raise capital, facilitating their growth and expansion endeavours.
Source: Business Standard
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