IPO Frenzy: 139 SMEs Raise Rs 3,540 Crore Via Public Issue In 2023 So Far

In 2022, 109 firms raised Rs 1,875 crore through IPOs. Experts further said that the outlook for the fundraising environment for SME IPOs is expected to remain favourable ahead.

Other factors contributing to the strong growth in fundraising include the positive movement in the markets, improvement in liquidity, and businesses scaling up.

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Small and Medium Enterprises (SME) received great interest in their initial public offerings (IPOs) this year due to robust participation from family offices along with high-net-worth individuals (HNIs), adequate market liquidity, and strong investor sentiments. So far in 2023, 139 SMEs have raised Rs 3,540 crore through issue sales, data from primedatabase.com revealed. 

This number was almost double in comparison to 2022 when 109 firms raised Rs 1,875 crore through IPOs. Experts further said that the outlook for the fundraising environment for SME IPOs is expected to remain favourable, reported PTI.

The major factors affecting this include the growth potential of specific sectors, market liquidity levels, investor sentiment, and potential regulatory changes. Abhishek Jain, head of research at Arihant Capital Markets Ltd, noted that the strong pace of fundraising is projected to be consistent, helped by these factors. 

 He added, “Going by the industry data, a total of 139 IPOs have debuted on the SME platforms -- BSE SME and NSE Emerge -- and raised Rs 3,540 crore this year (till October 20). In addition, the maiden public issues of two more SMEs -- Paragon Fine and Speciality Chemical and On Door Concepts -- are scheduled to open next week. These companies that came out with their maiden public issue belong to a wide range of sectors like IT, FMCG, automotive components, pharma, infrastructure, advertising, and hospitality. These firms have mobilised funds for expansion plans, support working capital requirements, and retire debt. The remarkable surge in SME fundraising through IPOs in 2023 can be attributed to the participation of family offices and HNIs that injected substantial capital into the SME market.”

Other factors contributing to the strong growth in fundraising include the positive movement in the markets, improvement in liquidity, and businesses scaling up. These developments have created a major demand for capital. “And many companies are taking advantage of these favourable market conditions to raise capital from the public market,” said Himanshu Kohli, co-founder of Client Associates. 

Kohli also noted that there is a lot of demand for ‘offers for sale because investors who had invested in those companies before are considering unlocking value and wish to exit through this route right now’. September witnessed the highest number of 37 SMEs entering the IPO market. Notably, Spectrum Talent Management marked the largest issue this year as it raised Rs 105 crore, followed by CFF Fluid Control which garnered Rs 86 crore.