The BSE SME Exchange?s plan to get a number of listed entities on board has been foiled by a series of regulatory hurdles.
While the SME exchange seems to have finally got its act together with 6-8 more IPOs on the anvil in the next two months, it continues to face uncertainties vis-a-vis its target of achieving at least 50 IPOs in a year. Its first IPO was way back in February 2012. The current regulatory norms, it is felt, are deterring companies as well as merchant bankers from going for IPOs.
?Unless Sebi bring in regulatory changes, it will be difficult for companies or merchant bankers to pursue IPOs with this exchange,? said Lakshman Gugulothu, CEO, BSE SME Exchange.
?After initial hiccups, we expect at least 6-8 IPOs to be listed in the next two months after BCB Finance and Monarch Healthcare, which got listed in February and May, respectively. This has been made possible through a series of clarifications and awareness programmes to comfort small and medium enterprises. However, we do not see a lot of IPOs happening unless issues, such as unlimited responsibilities absorbed at merchant bankers? level, limited liabilities/market making/sale of promoters’ holding during market making and lot sizes, etc, are resolved? added Lakshman.
?The current rules are exceptionally tough when it comes to absorbing unlimited responsibilities. A number of issues have been raised and solutions have been suggested to the market regulator. It is for Sebi to issue more clarifications and effect regulatory changes,? he said.
Lakshman said it was necessary to bring the regulations in line with the Indian market conditions. The ?copy-paste? approach from the Western markets won?t work, he said. ?The domestic market structure, invesment pattern and kind of investors are different from that of overseas markets,? added. Lakshman.
He said: ?We have created a conducive atmosphere at the exchange level. It is for the market regulator to keep the momentum with suitable regulations.?
A third company ? Max Alert Systems ? got listed on the exchange on Friday. Three more companies ? Jupiter Infomedia, Sangam Advisors and SRG Housing Finance ? are expected to go for IPOs before July end.
