BSE’s SME exchange to witness first public issue
BS REPORTER
Mumbai, 21 February
After much ado, the Bombay Stock Exchange (BSE) will kick-start its
small and medium enterprises (SME) segment with the ~8.5-crore initial
public offer (IPO) of a non-banking finance company (NBFC), BCB
Finance. The IPO, which will open for subscription on February 23,
will be the first issue to be traded on the segment in March.
According to an official from the Mumbai-based Aryaman Financial
Services, lead manager to the IPO, the total cost of the issue,
including the market-making fee, will be around 8-10 per cent of the
money raised. Market-making, which is compulsory for SMEs for three
years, had become a key issue for firms aspiring to list on the SME
platform.
Ikab Securities will charge ~75,000 a month as marketmaking fee for
three years, said amerchant banking official.
If the IPO is successful, it may pave the way for the listing of other
companies on the platform. Both BSE and the National Stock Exchange
(NSE) have been under tremendous pressure from the government to
launch trading in SMEs.
“We have many more SMEs lined up for IPO. Liquidity may not be an
issue for investors, as market-making will be adequate,” said Lakshman
Gugulothu, chief executive officer of BSE’s SME platform.
BCB, promoted by Mumbai-based stock brokers Bharat and Uttam Bagri of
BCB Broking, intends to use the money for investing in stock markets
and lending purpose. BCB promoters will sell 3.4 million shares at ~25
a piece. The shares carry a face value of ~10 each. After the IPO, the
company would be valued at over ~19 crore.
Turn to TSI Page 3 >SME platform gets trading lotsizes
The Securities and Exchange Board of India (Sebi) has said companies
wanting to list on the soon-to-be launched SME platform will have
standardised lot sizes during the IPO as well as in the secondary
market trading. It has prescribed 17 lot sizes for trading in these
companies, depending on the price band of the company. For instance,
those having a price band of ~14-~18 will have to trade in minimum lot
size of 8,000 shares. If the band falls under two different categories
of lot sizes, the upper end of the band will determine the lot size.
Turn to TSI Page 3 >
BSE’s SME exchange to witness first public issue
BCB, however, scores low on fundamentals, with too many risks
involved. According to the prospectus, it will invest ~3.5 crore in
stock market, debt market and mutual funds. Around ~2 crore will be
lent to clients as margin financing and ~65 lakh will be utilised for
general corporate purpose. The margin financing business has been in
doldrums for the past couple of years, as the lending books of some of
the large broking firms have halved. BCB operates from a 200 square
feet office leased from BCB Brokerage, its parent company, near the
BSE building.
According to the Securities and Exchange Board of India, SMEs are
allowed to raise between ~5 lakh and ~5 crore. Any company whose
postissue capital has a face value of ~50 lakh-~10 crore can list on
the SME Exchange.
Those with a post-issue capital of ~10 crore-~25 crore can choose to
list on either the SME Exchange or the main exchange. Companies with a
capital of over ~25 crore will have to list on the main board.
Both NSE and BSE are banking on the fact that many venture capitalists
and foreign funds have shown interest in Indian SMEs and, hence, will
be keen to invest in through the exchange
BS REPORTER
Mumbai, 21 February
After much ado, the Bombay Stock Exchange (BSE) will kick-start its
small and medium enterprises (SME) segment with the ~8.5-crore initial
public offer (IPO) of a non-banking finance company (NBFC), BCB
Finance. The IPO, which will open for subscription on February 23,
will be the first issue to be traded on the segment in March.
According to an official from the Mumbai-based Aryaman Financial
Services, lead manager to the IPO, the total cost of the issue,
including the market-making fee, will be around 8-10 per cent of the
money raised. Market-making, which is compulsory for SMEs for three
years, had become a key issue for firms aspiring to list on the SME
platform.
Ikab Securities will charge ~75,000 a month as marketmaking fee for
three years, said amerchant banking official.
If the IPO is successful, it may pave the way for the listing of other
companies on the platform. Both BSE and the National Stock Exchange
(NSE) have been under tremendous pressure from the government to
launch trading in SMEs.
“We have many more SMEs lined up for IPO. Liquidity may not be an
issue for investors, as market-making will be adequate,” said Lakshman
Gugulothu, chief executive officer of BSE’s SME platform.
BCB, promoted by Mumbai-based stock brokers Bharat and Uttam Bagri of
BCB Broking, intends to use the money for investing in stock markets
and lending purpose. BCB promoters will sell 3.4 million shares at ~25
a piece. The shares carry a face value of ~10 each. After the IPO, the
company would be valued at over ~19 crore.
Turn to TSI Page 3 >SME platform gets trading lotsizes
The Securities and Exchange Board of India (Sebi) has said companies
wanting to list on the soon-to-be launched SME platform will have
standardised lot sizes during the IPO as well as in the secondary
market trading. It has prescribed 17 lot sizes for trading in these
companies, depending on the price band of the company. For instance,
those having a price band of ~14-~18 will have to trade in minimum lot
size of 8,000 shares. If the band falls under two different categories
of lot sizes, the upper end of the band will determine the lot size.
Turn to TSI Page 3 >
BSE’s SME exchange to witness first public issue
BCB, however, scores low on fundamentals, with too many risks
involved. According to the prospectus, it will invest ~3.5 crore in
stock market, debt market and mutual funds. Around ~2 crore will be
lent to clients as margin financing and ~65 lakh will be utilised for
general corporate purpose. The margin financing business has been in
doldrums for the past couple of years, as the lending books of some of
the large broking firms have halved. BCB operates from a 200 square
feet office leased from BCB Brokerage, its parent company, near the
BSE building.
According to the Securities and Exchange Board of India, SMEs are
allowed to raise between ~5 lakh and ~5 crore. Any company whose
postissue capital has a face value of ~50 lakh-~10 crore can list on
the SME Exchange.
Those with a post-issue capital of ~10 crore-~25 crore can choose to
list on either the SME Exchange or the main exchange. Companies with a
capital of over ~25 crore will have to list on the main board.
Both NSE and BSE are banking on the fact that many venture capitalists
and foreign funds have shown interest in Indian SMEs and, hence, will
be keen to invest in through the exchange
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