The month of March 2012 witnessed a remarkable moment for the Small & Medium Enterprises (SMEs) with the launch of an exclusive Stock Exchange, supported by the Bombay Stock Exchange (BSE). The much discussed project was initiated by the BSE and NSE to offer an alternative stage for SMEs to raise capital for their growth and progress. The BSE SME exchange shares a common platform and infrastructure with the BSE whereas the NSE launched its version ‘Emerge’ with an online version.
More freedom for SMEs
The SME Exchange marks a new beginning for all small and medium-sized businesses in India which were introduced to this concept in the past one year. It is believed that Indian SMEs lack information regarding equity capital, stock market and funding options besides banks. Their dependence on banks and private lenders can now be easily replaced by this new initiative. The SME Exchange is expected to provide equity financing which can lower the debt burden of the listed companies, resulting in lower financing expenditures and a healthier balance sheet. This can help SMEs in developing their business from expansion to acquisition. Another important contributing factor is the visibility of the company which would be boosted by such an exchange and offer them access to the capital market. It also prepares the SMEs to grow and break into the bigger exchanges. Start-up issues related to many SMEs can also be solved by the presence of an exchange.
The Exchange and its operation
Various exchanges such as AIM (London), TSXV (Canada), GEM (Hong Kong), KOSDAQ (Korea) and NASDAQ (USA) were observed and studied to adapt their salient features and best practices. The SME Exchange would involve a minimum of 50 investors and Rs 50 lac post-initial public offer (IPO) paid-up capital. Listing would be compulsory for companies which have Rs 50 lac to Rs 10 crores and companies which have a paid-up capital between Rs 10 crores and Rs 25 crores have an option to list either on the SME Exchange or the main exchange.
Welcomed with open arms
The Exchange has received an encouraging support from various segments of the industry including manufacturing, textiles, IT, agro-based enterprises, and construction, among others. Even merchant bankers have expressed their interest in the initiative. Focus is on encouraging investments from small industrial towns and cities such as Dehradun, Jamshedpur and Haridwar, for raising capital from the SME Exchange. Tier-II and Tier-III cities are expected to be a big market for the SME Exchange.
New beginnings
The listing of BCB Finance marked the start of the BSE SME Exchange. Six SMEs have been already approved to enter the capital market and seven more are expected to follow suit. The target is to include about 10 by the end of the fiscal year and then extend up to 100 in the coming 18 months. An estimate puts the number of SMEs at a whopping 30 million, out of which about one million have a potential to be listed on the SME Exchange.
More freedom for SMEs
The SME Exchange marks a new beginning for all small and medium-sized businesses in India which were introduced to this concept in the past one year. It is believed that Indian SMEs lack information regarding equity capital, stock market and funding options besides banks. Their dependence on banks and private lenders can now be easily replaced by this new initiative. The SME Exchange is expected to provide equity financing which can lower the debt burden of the listed companies, resulting in lower financing expenditures and a healthier balance sheet. This can help SMEs in developing their business from expansion to acquisition. Another important contributing factor is the visibility of the company which would be boosted by such an exchange and offer them access to the capital market. It also prepares the SMEs to grow and break into the bigger exchanges. Start-up issues related to many SMEs can also be solved by the presence of an exchange.
The Exchange and its operation
Various exchanges such as AIM (London), TSXV (Canada), GEM (Hong Kong), KOSDAQ (Korea) and NASDAQ (USA) were observed and studied to adapt their salient features and best practices. The SME Exchange would involve a minimum of 50 investors and Rs 50 lac post-initial public offer (IPO) paid-up capital. Listing would be compulsory for companies which have Rs 50 lac to Rs 10 crores and companies which have a paid-up capital between Rs 10 crores and Rs 25 crores have an option to list either on the SME Exchange or the main exchange.
Welcomed with open arms
The Exchange has received an encouraging support from various segments of the industry including manufacturing, textiles, IT, agro-based enterprises, and construction, among others. Even merchant bankers have expressed their interest in the initiative. Focus is on encouraging investments from small industrial towns and cities such as Dehradun, Jamshedpur and Haridwar, for raising capital from the SME Exchange. Tier-II and Tier-III cities are expected to be a big market for the SME Exchange.
New beginnings
The listing of BCB Finance marked the start of the BSE SME Exchange. Six SMEs have been already approved to enter the capital market and seven more are expected to follow suit. The target is to include about 10 by the end of the fiscal year and then extend up to 100 in the coming 18 months. An estimate puts the number of SMEs at a whopping 30 million, out of which about one million have a potential to be listed on the SME Exchange.
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