look news india
Ahmedabad: A December year-end party is currently going on in the Indian IPO market. IPOs of companies are coming one after the other, investors are appreciating it and investors are getting returns from the listing of companies before or after it. Especially once again the craze for SME IPO has increased in the market.
The interest of institutional investors in small and medium enterprises seems to be increasing rapidly. This trend is clearly reflected in the steadily increasing share of institutional investors in initial public offerings of SME companies. This category of the stock market has generally been dominated by retail investors, but now big institutional investors are also placing big bets.
The amount raised through SME IPO is typically Rs. The limit of Rs 50 crore, which is considered a small amount for institutional investors, but recent data shows that the share of institutional investors in SME IPOs has increased to almost 50 per cent in December, 2024.
The surprising thing is that till about three years ago this figure was only in single digits.
If we look at the data of Prime Database, the share of retail i.e. small investors in SME IPOs has continuously decreased. At the beginning of 2022, the share of small investors in the total amount raised through SME IPO was about two-thirds i.e. about 65-70 percent, but now this figure has come down to 34.9 percent. Applications from retail investors usually range between Rs 1 to 2 lakh.
Statistics show that the role of institutional investors in SME IPOs is gradually increasing. The interest of offices that manage family assets is also increasing towards SMEs.
Alternative investment funds, family asset management offices and portfolio management service providers are taking long-term stakes in smaller companies, but mutual funds or foreign portfolio investors are not. A dominant regulatory framework also keeps them away from these investments as they have to meet minimum liquidity and market capitalization requirements.
According to Prime Database, in the year 2023-24, about 200 SMEs have come to the IPO market to raise funds and these units have raised about Rs 2,000 crore. Funds worth more than Rs 6000 crore have also been collected.