SEBI strict on SME IPO
Ashwini Bhatia, Whole Time Member of Securities and Exchange Board of India (SEBI), said that market exchanges and market eco-system should learn to say ‘no’ in case of listing of small and medium enterprises (SME). He said this amid growing concerns of manipulation and fraud in this sector. This statement of Ashwini Bhatia has come at a time when the market cap of SME has increased to Rs 2 trillion and there is a competition among investors to get subscription during IPO in this sector.
Auditors are advised to act like a good doctor
Ashwani Bhatia highlights the lack of due diligence on the part of auditors and the market eco-system, leading to inadequate scrutiny and imbalances. “Nobody is saying ‘no’ to SME listings, even if they are inflating their balance sheets. Auditors should be like a good doctor – don’t give them steroids when they can survive on paracetamol,” he said at CII’s Financing 3.0 Summit.
SMEs should look for options other than listing
Ashwani Bhatia urged SMEs to look for other funding opportunities through other alternative funds before considering an IPO. “Instead of directly going for an IPO, going to angel investors is a better way. Spend some time there and then come to the exchanges,” he suggested to SMEs. SEBI-registered Alternative Investment Funds (AIFs) have raised Rs 1,169 crore for SME financing, of which Rs 735 crore has already been invested.
Not all SMEs are performing well
At the Financing 3.0 Summit, National Stock Exchange (NSE) MD and CEO Ashish Kumar Chauhan said the exchanges have taken note of the growing concerns over the listing of SMEs. “We will maintain a balance and stricter guidelines are expected. Not all SMEs are doing well,” he said.
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