Ahmedabad: Once seen struggling to raise funds, small and medium enterprises (SMEs) are fast becoming darling of investors. The growing investor confidence in SME initial public offerings (IPOs) is evident from the fact that eight such IPOs have been oversubscribed 20 times or more since January 2017.

Take example of Dev Information Technology Ltd, an Ahmedabad-based informational technology provider. The company’s public issue, which closed on April 6, was oversubscribed 76.08 times with investors placing bids worth Rs. 463.5 crore as against the issue size of Rs.6.25 crore.

As per the data provided by primary market tracker Prime Database, IPOs of smaller firms such as Chemcrux Enterprises Ltd, Focus Lighting and Fixtures Ltd and Global Education Ltd were oversubscribed 57.41, 92.96 and 83.86 times respectively.

Since the beginning of 2017, 31 firms have launched their IPOs on SME exchanges run by the Bombay Stock Exchange and National Stock Exchange of India (NSE). All of these have been oversubscribed, which also include 10 from Gujarat and 8 from Maharashtra.

“Investors are now increasingly getting drawn to SMEs as these investors have made good returns in SME IPOs they had invested in previously. Most of such firms do not price their offers aggressively leaving room for investors to make money,” said Ajay Thakur, BSE SME. The data shows that 78 SMEs raised a record Rs 807 crore through IPOs in 2016-17, which is more than double the amount of Rs 311 crore mopped up in 2015-16.

Riding high on growing interest by wider class of investors, including institutional investors, SMEs are now coming up with bigger IPOs. Interestingly, a foreign institutional investor (FII) also bid for 35% of a recently concluded SME IPO.

“SME platforms are getting IPOs of more than Rs 50 crore, which was perhaps not thought of 3 years back. Gujarat-based Euro India Fresh Foods recently raised approximately Rs 51 crore through SME IPO. Again, Zota Healthcare, incidentally from Gujarat, would be launching its IPO of Rs 58 crore,” added Mahavir Lunawat, group MD, Pantomath Capital Advisors.

Source: Times of India