Announcing MCX Stock Exchange's intent to have a dedicated platform for small businesses, the soon-to-be-launched bourse's promoter and vice- chairman Jignesh Shah today said SMEs should aspire to raise up to USD 20 million annually through such platforms.
"Our entrepreneurs are best in class. They require risk capital. If China can raise USD 12 billion in fresh capital, I think we have to aspire to raise a minimum USD10-20 million of fresh capital by SMEs," Shah said speaking at an industry conference here. The country's first privately promoted bourse MCX-SX, which has announced to go live before Diwali (November) after a protracted battle with the regulator Sebi, will definitely be launching a dedicated SME platform as has been done by its rivals BSE and NSE, Shah told PTI on the sidelines.
However, he declined to share a timeline for the same. Shah said that at least 1 per cent of the 30 million SMEs have strong balance sheets to get AAA ratings and can look at raising money from the primary market.
Citing the studies and roadshows done by MCX-SX in the recent past, he said many SMEs depend on the informal system for their financing needs, paying up to 2 per cent per month for debt.
He cited how in spite of such a high cost of servicing debt, the businesses continue to remain competitive and wondered the benefits which will accrue if they shift to the formal way of finance and access the equity markets.
Both the BSE and NSE have launched dedicated SME platforms earlier in the year amidst fanfare after the Sebi gave its nod for such exchanges to boost the small businesses. Already a few companies have listed on these two platforms.
"We should not be happy (only) about inaugurating an exchange for SMEs, but there should be a market model structure which suits SMEs' requirements, then only it will work," Shah said today.
He further said private equity, venture capital and angel funds will invest in companies only if they are confident of an exit route, which can be made easy by the formally platforms like exchanges.
Shah also welcomed the decision to amend the FCRA (Forward Contracts Regulations Act) taken by the Cabinet yesterday, saying it is a very big positive step. The government yesterday cleared the new FCRA Bill which seeks to provide complete autonomy to the commodities FMC and to introduce