StartupTalky

Tag: SME IPOs

  • On February 6, Solarium Green Energy will Launch its SME IPO for INR 105 Crore

    One of the most well-known companies in the solar solutions sector, Solarium Green Energy, is preparing to go public with its SME IPO on February 6, 2025. Through this offering, the company would raise around INR 105.04 crore, or $12.5 million. For the business, it is a crucial milestone as it continues on its current growth trajectory.

    It will issue 5,500,000 shares having a face value of INR 10 apiece, priced between INR 181 and INR 191 per share. The minimum lot size required to participate is 600 equity shares, which translates to a total investment of INR 141,600. The deadline for the offering is February 10, 2025.

    The Qualified Institutional Buyers (QIBs) will receive roughly 2,605,000 shares, or 46% of all shares. Market makers will receive 286,800 shares, while high-net-worth individuals will be eligible for 782,400 shares. With a 33.17% total share issue for retail investors, the company is anticipated to attract a significant number of investors.

    How the Company is Planning to Utilise Proceeds?

    The primary goals of the IPO’s proceeds are to cover general business needs and working capital requirements. It is anticipated that this calculated action will strengthen Solarium’s operating capacities and help realise its aspirational expansion goals.

    For Solarium Green Energy, the IPO marks a critical turning point as it seeks to take advantage of India’s rising demand for renewable energy solutions. Solarium is well-positioned to draw substantial interest from investors wishing to help the shift to sustainable energy because to its strong business plan, track record, and well-defined strategic goals. The company’s significant achievement is particularly highlighted by the SME IPO, although it follows a broader trend in which green technology investment has increased in India.

    For the fiscal year that concluded in March 2024, Solarium recorded INR 177.80 crore in revenue and INR 15.59 crore in net earnings. In contrast, its revenue in the first half of the current fiscal year (H1FY25) was INR 81.99 crore, and its net profits came to INR 7.55 crore.

    About Solarium Green Energy Limited

    Ankit Garg founded Solarium Green Energy Limited, a company that specialises in turnkey solar systems. Design, engineering, procurement, testing, installation, commissioning, and full operation and maintenance (O&M) are among the services it provides. With 11,195 residential rooftop projects, 172 commercial and industrial (C&I) projects, and 17 government projects completed between April 2021 and September 2024, Solarium has made great strides in the solar business since its founding.

    This outstanding achievement suggests the company’s market leadership and commitment to implementing renewable energy solutions throughout India. Zunroof, SolarSquare, Cleantech, Mysun, Oorjan, and Freyr Energy are competitors of Solarium, which is the first business in the Indian startup ecosystem to go public with an SME IPO in 2025.

    OfBusiness Converts to Public Company Ahead of IPO
    OfBusiness has officially become a public company ahead of its planned IPO, marking a key step in its journey toward listing and expanding its market presence.
    StartupTalkyNitin Konde

  • SEBI Makes the Rules for SME IPOs Rigorous

    The Securities and Exchange Board of India (Sebi) has, as anticipated, strengthened the rules pertaining to IPOs for small and medium-sized businesses. The capital market regulator set a cap on shares that could be sold through the offer for sale (OFS) route and implemented profitability standards during its Board meeting on 18 December.

    Before submitting their DRHP, SMEs must now demonstrate an operational profit of at least around INR 1 crore for two of the previous three fiscal years. Furthermore, the OFS size shouldn’t exceed 20% of the issue size overall. In addition, through the IPO, these stockholders are not permitted to sell more than 50% of their whole holdings.

    Tightening the Lock-In Period

    Promoters who hold more than the minimum promoter contribution (MPC) are subject to longer lock-in periods. One year will be the lock-in period for half of such excess holdings, and two years for the other half. In terms of allocation, the main board IPO process and the NII allocation technique for SME IPOs are identical. 15% of the entire issue size, or INR 10 crore, whichever is less, is the maximum amount allotted for general corporate purpose (GCP) in SME IPOs.

    According to the new regulations, debts to promoters, promoter groups, or associated parties cannot be repaid with the proceeds of an SME IPO. In addition, the public will now have 21 days to examine and comment on SME IPO DRHPs. The DRHPs will be made available by stock exchanges via QR codes and public notifications.

    New Rules Will Change the Business Dynamics

    A new set of guidelines for post-IPO compliance has been developed. If SME businesses follow the rules for main board listing, they can still raise money without moving to the main board. SME-listed companies would be subject to the same related party transaction regulations as main board-listed companies, with a lower threshold of 10% of yearly consolidated turnover, or INR 50 crore.

    New rules have also been agreed upon by the Sebi board to guarantee that funds raised by mutual funds through New Fund Offers (NFOs) be deployed on schedule. The goal of the new structure is to incentivise AMCs to only collect as much money in NFOs as may be used within an acceptable time limit, typically 30 days.

    Reforms to improve the ease of doing business for Debenture Trustees, ESG rating agencies, InvITs, REITs, and SM REITs are among the other improvements that the board has adopted. Sebi chooses to change the rules governing investment banking. On December 18, the Sebi board decided to limit the scope of activity for investment banks and merchant bankers. Under the new regulations, merchant bankers will only engage in activities that the Sebi has approved. Within two years, any activities that are not allowed should be divided into a different legal organisation with a different brand name.

    InCred Aims for a Diwali 2025 INR 5,000 Crore IPO Launch
    InCred Financial Services announces plans to launch a massive INR 5,000 crore IPO by Diwali 2025, targeting growth and expansion in the financial sector.
    StartupTalkyNitin Konde

  • Sebi Wants to Raise the Minimum Subscription for SME IPOs in Order to Safeguard Investors

    Since more and more individual investors are participating in small and medium-sized business IPOs, the market regulator has suggested at least doubling the minimum subscription amount.

    In a consultation document published on 19 November by the Securities and Exchange Board of India (Sebi), the regulator suggested raising the minimum application size for SME IPOs from INR 1 lakh to INR 2 lakh. Sebi even proposed raising the sum to INR 4 lakh in one of the other recommendations.

    Over the past few years, there has been a growth in retail individual participation in SME IPOs. Therefore, it is suggested to increase the application size in order to protect the interests of smaller retail investors, given that SME IPOs tend to have a higher element of risk and that investors may become stuck if sentiments change after listing. This is because a larger application size will limit participation by smaller investors and attract investors who are willing to take on more risk, which will increase the SME segment’s overall credibility, as per the paper.

    Listing Process and Corporate Governance Norms for SMEs

    Sebi said that the action is a component of its larger examination of corporate governance standards and the listing procedure for SMEs, which have seen a sharp increase in IPOs, particularly since 2022. With 196 initial public offerings (IPOs) that raised over INR 6,000 crore, FY24 saw the most SME capital raising and public issues since the creation of SME platforms. Additionally, as of October 15, 159 SME IPOs had raised over INR 5700 crore in FY25, the regulator noted.

    It comes as the regulator has repeatedly warned investors about dubious activities in the nation’s SME market and about some SMEs’ exaggerated projections. A notable change in the market supports Sebi’s plan to double the minimum subscription amount. The Sensex and Nifty indices have increased by about 4.5 times since Sebi’s initial structure was implemented more than 14 years ago.

    Further Suggestions Made by Sebi

    Additionally, Sebi recommended that the “draw of lot” allocation method, which is employed for retail investors in mainboard IPOs, be applied to SME IPOs as well. In order to give smaller investors a greater chance of receiving allocations in the event of oversubscription, it was also suggested to divide the non-institutional investor group into two subcategories according to application size.

    The introduction of an obligatory monitoring agency for initial public offerings (IPOs) if the issue exceeds INR 20 crore is one of the paper’s main recommendations. By certifying the use of revenues, these organisations would make sure that money is spent for the reasons specified in the offer contract. A statutory auditor’s certificate would be necessary to verify the use of the proceeds for smaller initial public offerings (IPOs) that fall below this threshold.

    In an effort to tighten qualifying requirements, Sebi suggested that businesses looking to list must have made at least INR 3 crore in operating profit (profits before interest and taxes) in two of the previous three fiscal years. For its issued capital and proposed new shares, it also recommended requiring that shares issued in the IPO have a face value of INR 10 each.

    Additionally, the capital market regulator suggested that SME-listed businesses be subject to the related-party transaction (RPT) standards found in Sebi’s Listing Obligations and Disclosure Requirements Regulations (LODR). Companies with less than INR 10 crore in paid-up capital and less than INR 25 crore in net worth are an exception.

    RBI to Act Against Banks Failing KYC and Customer Care Standards
    The RBI plans to take action against banks that fail to meet KYC and customer care standards, ensuring better compliance and customer service.
    StartupTalkyNitin Konde