BSE's SME exchange to witness first IPO today

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SME Times News Bureau | 23 Feb, 2012
After a long gap, the Bombay Stock Exchange (BSE) will kick-start its small and medium enterprises (SME) platform with the Rs 8.5 crore initial public offer (IPO) of a non-banking finance company (NBFC), BCB Finance.

The IPO, which is scheduled to open for subscription on February 23, will be the first issue to be traded on the segment in March, reports media. The company will raise Rs 8.85 crore through the issue, which will close on February 27 and the issue price is fixed at Rs 25 a share.

BCB Finance is primarily engaged in the business of advancing loans and investing/trading in securities. If the IPO is successful, it may pave the way for the listing of other companies on the platform, it said.

Both BSE and the National Stock Exchange (NSE) have been under tremendous pressure from the government to launch a separate trading platform for 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.

SEBI prescribes lot size for IPOs from SMEs

Meanwhile market regulator Securities and Exchange Board of India (SEBI) has prescribed 'lot sizes' for shares being offered in IPO on these exchange, as per the price band of the public offers.

"...it has been decided to standardise the lot size of an Initial Public Offer (IPO) to list on the SME exchange and for the secondary market trading on such platforms," SEBI said in a circular on Tuesday.

It said that up to the price band of Rs 14, the lot size will be 10,000. For price band of over Rs 14 and below Rs 18, the lot size would be 8,000 shares.

It also said that, at an IPO stage, if the price band decided falls within two different price bands then the minimum application lot size shall be decided based on the price band in which the higher price falls into.

"The lot size shall not be reduced by the exchange to below the initial lot size if the trading price is below the IPO issue price," it added.

The stock exchanges can review the lot size once in every six months by giving an advance notice of at least one month to the market, it said.

In case of over-subscription, if the option to retain ten percent of the net offer to public for the purpose of making allotment in minimum lots is exercised, then it shall be ensured by the Issuer/Stock Exchanges/ Merchant Bankers that the post issue paid up capital of the issuer does not go beyond Rs.25 crore, SEBI said.