Mumbai: Markets regulator SEBI in a consultation paper on SME IPOs made a series of proposals, the most important being a potential doubling of the minimum lot size to Rs 2 lakh from Rs 1 lakh at present. The proposal may be guided by the watchdog’s commitment to safeguard retail investors from market risk.
Other proposals to safeguard investors include raising the promoter lock-in period to 5 years from 3 years at present. SEBI has also proposed to cap the limit for SME IPOs aimed to raise funds for general corporate purposes to Rs 10 crore or 10 per cent, whichever is less.
SEBI – PROPOSES TO RAISE MINIMUM SUBSCRIPTION FOR SME IPOS TO 200,000 RUPEES FROM 100,000 RUPEES || SEBI – PROPOSED MINIMUM ALLOTTEES IN SME PUBLIC ISSUE MAY BE INCREASED TO 200 – CONSULTATION PAPER
SEBI PROPOSES CHANGES TO ALLOCATION METHODOLOGY FOR NON INSTITUTIONAL INVESTORS…
— Rajiv Mehta (@rajivmehta19) November 19, 2024
SME IPO rule change proposal
The minimum investor limit can be raised to 200 from 50 right now. According to the paper, SME IPOs worth more than Rs 20 crore can be placed under monitoring, according to the paper. SME IPOs may be capped in the offer-for-sale segment at 20 per cent of the issue size.
Among large investors, the SEBI paper proposes to reserve a segment for investors eyeing up to Rs 10 lakh investment. Those investing above Rs 10 lakh may be entitled to two-thirds of the IPO, ZEE Business reported, citing the paper.
Why SEBI is concerned about SME IPOs
A total of 166 SME IPOs were listed until September 2024, according to exchange data. Out of these more than half the companies gave more than 50 per cent returns by 67 such IPOs doubled investors’ money, the ET reported. Dwarka, Delhi-based bike chain operator Sawhney Motors’ Rs 12 crore IPO was oversubscribed 400X in August 2024. This indicated Rs 4,800 crore worth of bids for just a Rs 12 crore IPO, leading to concerns about investors’ exuberance regarding the IPO frenzy in India’s stock markets.
SEBI has floated a consultation paper proposing significant changes to their structure and subscription rules. Know more Markets Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
