The Securities and Exchange Board of India (Sebi) has given an indirect fillip to the separate listing platform for small and medium enterprises (SME) by tightening the listing norms for companies that do not have a profitability track record. This, experts say, will lead to more companies opting for the SME platform.
According to the regulator, any company with a profit before tax (PBT) of less than R15 crore can list on the exchanges only if it is able to ensure 75% allotment to institutional investors, also known as QIBs. The other avenue is to list on the SME platform.
Investment bankers say that this increase in the allotment portion for QIBs will lead to many mid-sized companies opting for the SME platform. They say the current market conditions make it difficult for a company with no profitability track record to garner such a high share of institutional subscription.
While bankers are not expecting any sudden spurt in companies wanting to list on the SME segment, they say the results would be visible gradually. According to the earlier norms, if a company did not have a profitability track record in three of the last five years, it could use only the book-building route while reserving 50% for institutional bidders. Incidentally, only a handful of companies have listed on the SME segment that was launched in March by the BSE and the NSE.
While the BSE has around 4-5 companies on board, the NSE is yet to see the first listing on its SME platform named Emerge.
Regulator makes it easy for frequent debt issues
Companies that want to raise money through private placement of debt will also find the going much easy now with the regulator doing away with the need for filing a document every time a debt issue is planned.
After the board meeting on Thursday, Sebi said that companies can file a document that will have a validity of 180 days during which repeated debt issues can be executed. There are many entities, especially those from non-banking financial companies sector, that use the debt route quite frequently to garner money.
?In case of frequent issues through private placement, an enabling clause for a shelf placement document with a validity of 180 days has been provided,? said a Sebi release issued on Thursday.
