SME Primer - SME IPO and Listing

Report
SME Primer
Privileged & Confidential
Outline
•
SME Listing - Background
•
SME Listing - An Overview of Key Requirements & Eligibility Norms
•
Core advantages of SME Listing
•
SME Listing - Coming up in a BIG Way…
•
Pantomath – Companion in Process
•
Annexures
Pantomath Capital Advisors Pvt. Ltd. (SEBI Registered Category I Merchant Bankers) – A Pantomath group entity
2
SME Listing – Background
Pantomath Capital Advisors Pvt. Ltd. (SEBI Registered Category I Merchant Bankers) – A Pantomath group entity
3
SMEs – The backbone of Indian economy
Nation’s 1.3 million SMEs account for 40% of
India's total exports
At 48 million, India is second to China in
number of SMEs
SMEs employ close to 40% of India's workforce
& contributes 45% to India's manufacturing
output
SMEs are expected to drive the next-level
growth of Indian economy provided they have
enabling platform and avenues
SMEs face major problem of capital
inadequacy
Contribution
GDP
to
8.7 %
Share
of
Industrial output
45 %
Share of Exports
40 %
Total
Employment
69
million
Job
creation
every year
1.3
million
Source : Ministry of Micro, Small and Medium Enterprises,
GOI
This problem can be tackled
through Capital Market
Pantomath Capital Advisors Pvt. Ltd. (SEBI Registered Category I Merchant Bankers) – A Pantomath group entity
4
Lifecycle of SME
Valley of
Death
Less risky
Very risky
Pre seed
Seed/Start up
Early growth
Expansion
Angel Investors
Angel Investors
Venture Cap
IPO
Govt. Grants
Govt. Grants
PE
Debt
Bank Credits
Bank Credits
IPO
PE
Personal Finances
Venture Cap
Funding Options
Partnership
Pantomath Capital Advisors Pvt. Ltd. (SEBI Registered Category I Merchant Bankers) – A Pantomath group entity
5
SME Listing Background…
BSE and NSE
launched
their
respective
platform for
SMEs; MCX
too is
gearing up
for SME
Exchange
The move
aims at
providing an
opportunity
to SME
entrepreneu
rs to raise
growth
capital and
reap
benefits of
listed space
Both BSE &
NSE
leverage
their
existing
‘equity
platform’
for SME
exchange
platform
As per
estimate of
SME
Chamber of
India, over
5000 SMEs
have the
potential
for listing
Pantomath Capital Advisors Pvt. Ltd. (SEBI Registered Category I Merchant Bankers) – A Pantomath group entity
A
facilitative
framework
for SME
listing
6
SME Listing – Evolution…
5-Nov-08
SEBI lays
down
broad
framework
for SME
listing
platform
19-Apr-12
BSE
Eligibility
Norms
for SME
listing
Jan-10
PM Task
Force
recommends SME
listing
exchange
13-Mar-12
BSE SME
Exchange
launch
26-Apr-10
SEBI
circular on
Guideline
s for
market
making
21-Feb-12
SEBI
circular
standardizi
ng lot size
for SME
exchange
17-May-10
SEBI
Circular
rolling out
model
listing
agreement
for SMEs
14-Oct-11
SEBI
approval
to NSE
SME
Exchange
18-May-10
Amendments in
SEBI
Regulations
(ICDR,
Merchant
Bankers etc.
5-Oct-11
Amendmends in
Listing
Agreeme
nt
Pantomath Capital Advisors Pvt. Ltd. (SEBI Registered Category I Merchant Bankers) – A Pantomath group entity
31-Dec-10
SEBI
Master
Circular on
SME
exchange
& Market
Making
27-Sep-11
SEBI
approval
to BSE
SME
Exchange
7
SME Listing - An Overview of Key
Requirements & Eligibility Norms
Pantomath Capital Advisors Pvt. Ltd. (SEBI Registered Category I Merchant Bankers) – A Pantomath group entity
8
SME Listing - Key Requirements & Eligibility Norms
SEBI
BSE
NSE
Post Issue Face Value Capital
Capital threshold for Listing
Particulars
Main board
25 Crores
SME/Main Board
10 Crores
Offer doc not
subject to SEBI
vetting
SME Exchange
Requirement
Minimum application
amount / trading lot
INR 1 Lac
Underwriting
100% Mandatory
(of which 15% to be done by MB in his own account)
Market making (to be
undertaken by MB)
Through Exchange-registered market makers for min 3
years
Public Shareholding
Min. 25%
Min. 50 investors
No post-listing continuous requirement
Refer
Annexure
for key
norms of
SEBI ICDR
Provisions for migration to / from Main Board from / to SME Exchange
Pantomath Capital Advisors Pvt. Ltd. (SEBI Registered Category I Merchant Bankers) – A Pantomath group entity
9
SME Listing - Key Requirements & Eligibility Norms
SEBI
Max : INR 25 crore
Min : INR 1 crore
BSE
Post Issue
Capital (FV)
NSE
•
•
Track Record
•
Refer
Annexure
for key
norms of
LA
•
•
•
•
•
Net Tangible Assets : INR 1 crore (as per
latest audited results)
Net Worth (excl. Rev. Reserve) : INR 1 crore
or 3 crore, if no track record
Track record of distributable profits for at
least 2 years out of preceding 3 completed
FYs
Mandatory facilitation of trading in Demat
securities
Certificate that no winding petition or
reference to BIFR
Mandatory corporate website
Promoters to attend to interview with
Listing Advisory Committee
No change in promoter in preceding 1 year
Pantomath Capital Advisors Pvt. Ltd. (SEBI Registered Category I Merchant Bankers) – A Pantomath group entity
Other
Requirement
10
SME Listing - Key Requirements & Eligibility Norms
SEBI
BSE
Same as BSE
Post Issue
Capital (FV)
NSE
•
•
Track Record
•
Track record of at least 3 years
Positive cash accruals (EBDT) from
operations and positive net worth for
at least 2 FYs preceding the
application
In case the above conditions are not
fulfilled, Exchange Authority (MD &
Joint MD) to decide
Same as BSE plus additional certification
/ disclosures on litigation etc.
Pantomath Capital Advisors Pvt. Ltd. (SEBI Registered Category I Merchant Bankers) – A Pantomath group entity
Other
Requirement
11
BSE SME vs. Main Board
“SME
Exchange
has a
winning
edge over
Main
Board”
Parameters
Main Board
SME Exchange
Post – issue paid up
capital
Min INR 10 crore
Min INR 1 crore; Max INR 25
crore
Minimum Allotees in IPO
1000
50
IPO underwriting
Non Mandatory
(Under
50%
compulsory
subscription to QIB’s)
Mandatory
(100% underwritten with MB
underwriting 15%)
IPO Grading
Mandatory
Not mandatory
Track record
Stringent track record norms
Relaxed track record norms
Offer Document vetting
By SEBI
By Exchange
IPO Application Size
INR 10000 – INR 15000
Min. INR 1 lac
IPO Time frame
6 months
2 – 3 Months
Reporting Requirements
Quarterly
Half yearly
Pantomath Capital Advisors Pvt. Ltd. (SEBI Registered Category I Merchant Bankers) – A Pantomath group entity
12
Core Advantages of SME Listing
Pantomath Capital Advisors Pvt. Ltd. (SEBI Registered Category I Merchant Bankers) – A Pantomath group entity
13
Core Advantages of Listing
• Easy capital & fund
availability
• Avoid diminution in value
of business
• M&A Currency
• Better liquidity – entry &
exit platform
Core
Advantages of
Listing
• No tax on LTCG
• STCG Tax applicable @ 15%
- reduced rate
• No tax on equity infusion in
the company
• No tax on ‘distress
business’ purchase
• Enhancing worth
• ESOPs – Talent retention
tool
• Visibility – Profile building
• Governance - Internal
systems
Pantomath Capital Advisors Pvt. Ltd. (SEBI Registered Category I Merchant Bankers) – A Pantomath group entity
14
SME Listing – Coming up in a BIG way…
Pantomath Capital Advisors Pvt. Ltd. (SEBI Registered Category I Merchant Bankers) – A Pantomath group entity
15
SME LISTING - Coming up in a BIG Way…
So far, 50 Companies have been listed on BSE SME Exchange and 4 on NSE Emerge Exchange
BSE SME Index
Sunstar
GCM
Realty Securities
A. Market Cap
Pre Issue Net
Worth
Looks
Health
Care
Eco
Friendly
INR Crores
5.54
8.56
3.06
5.90
Issue Size
10.62
12.18
12.00
7.515
Market
Capitalization*
360.73 996.98
B. Price Pattern
Issue Price
CMP (Face Value
INR 10)*
54.33
500
400
300
200
100
0
399.48
INR Per Share
20.00
181
20.00
525
40.00
90.55
25.00
404
* Closing Price as on June 2, 2014
Pantomath Capital Advisors Pvt. Ltd. (SEBI Registered Category I Merchant Bankers) – A Pantomath group entity
16
Pantomath – Companion in Process
4.
2.
3.
1.
End-to-end
assistance
and
hand-holding
by
expert &
dedicated
Team –
TEAM
PANTOMATH
Pantomath Capital Advisors Pvt. Ltd. (SEBI Registered Category I Merchant Bankers) – A Pantomath group entity
17
SME Listing – Way Forward…
1
Appointment of Merchant Banker
Restructuring of capital
3
Due Diligence & Pre-IPO preparation
Preparation of Offer Document
5
6
Filing of Offer Document with BSE & Others
Issue Pricing & Allocation
9
4
Marketing Strategy
Appointment of other intermediaries
7
2
8
Listing & Market Making
Pantomath Capital Advisors Pvt. Ltd. (SEBI Registered Category I Merchant Bankers) – A Pantomath group entity
18
Let’s Take It Forward….
CAPITAL ADVISORS PRIVATE LIMITED
SEBI Registered Category I Merchant Bankers
Progress with Values
Corporate Office
108, Madhava Premises Co-operative Society Limited, Bandra Kurla
Complex, Bandra (East), Mumbai - 400 051.
Landline:(022) 26598690-91, Fax:(022)26598690
www.pantomathgroup.com
Disclaimer
All data and information is provided for informational purposes only and is not intended for any factual use. It
should not be considered as binding / statutory provisions. Neither Pantomath Capital Advisors nor any of its
group company, directors, or employs shall be liable for any of the data or content provided for any actions taken
in reliance thereon.
19
Annexures
Pantomath’s End-to-end Services
Pantomath Capital Advisors Pvt. Ltd. (SEBI Registered Category I Merchant Bankers) – A Pantomath group entity
20
Phase- I: Pre-IPO Capital Restructuring & Preparation
Under the phase, we shall assist you in preparing for IPO and listing on SME Exchange. The services under
this phase shall include the following :
 Assistance in devising appropriate capital restructuring plan;
 Assistance in statutory compliance management and setting up minimum corporate governance
practices expected by a listed company from the perspective of the following rules / regulations :
 Companies Act, 1956
 Listing Agreement applicable for SMEs
 BSE listing norms
 SEBI ICDR Regulations;
 Assistance in appointment of market intermediaries and other parties including the following;
 Underwriters
 Market Makers
 Registrars to Issue
 Bankers to Issue
 PR Agency, Printer etc.;
 Assistance in devising a complete IPO plan and strategy including the likely post-issue shareholding
distribution pattern.
Pantomath Capital Advisors Pvt. Ltd. (SEBI Registered Category I Merchant Bankers) – A Pantomath group entity
21
Phase- II: Documentation Preparation
We shall assist you in drafting of IPO Offer Document and other important agreements,
documents and resolutions necessary for an SME IPO process. An indicative list of
important documents is as under for easy understanding :
 IPO Offer Document,
 Tripartite Agreement with NSDL, CDSL and Registrar to Issue,
 Underwriting Agreement,
 Market Making Agreement,
 Agreement with Bankers to Issue,
 Agreement with Registrar to Issue,
 Board / Shareholders’ Resolutions,
 Certificates, Letters of Representations etc,
 Draft of public advertisements, notices etc,
 Forms / Applications to be filed with BSE, ROC and other regulatory office.
Pantomath Capital Advisors Pvt. Ltd. (SEBI Registered Category I Merchant Bankers) – A Pantomath group entity
22
Phase- III: Offer Management
Once all pre-IPO preparations would be over including meeting the eligibility criteria,
appointment of other market intermediaries, and drafting of offer document, we shall
initiate the actual process of IPO. Our services under the phase shall include end-to-end
IPO activities :
 Filing of IPO Offer Document with BSE and other regulatory offices like SEBI and ROC;
 Follow-up with BSE and ROC for their approvals;
 Coordinating and assistance in interview with SE Listing Advisory Committee,
 Assistance in execution of agreements with other market intermediaries;
 Assistance in launch of IPO and coordinate with other parties including PR Agency,
Printers for adequate public advertisement, distribution of application forms as
required statutorily;
 Monitoring the flow of applications and keeping a real-time discussion with the
management of the Company;
 Coordinating with bankers and registrars for deposit of application moneys and
finalization of allotment list in consultation with the stock exchange .
Pantomath Capital Advisors Pvt. Ltd. (SEBI Registered Category I Merchant Bankers) – A Pantomath group entity
23
Phase- IV: Listing Assistance
Finally, post IPO closure and finalization of allotment, we shall initiate the activities for
listing of equity shares of the Company on SME Exchange. Our scope of services under
this phase shall include the following:
 Assistance in completing allotment of shares to the successful allotees,
 Preparing listing application ,
 Filing of listing application with Stock Exchange(SE),
 Follow-up with SE and obtain listing approval,
 Assist in trading formalities and obtain SE’s trading approval,
 Assist in making required public disclosures as required statutorily,
 Coordinating for continuous market making for 3 years.
Pantomath Capital Advisors Pvt. Ltd. (SEBI Registered Category I Merchant Bankers) – A Pantomath group entity
24
Annexures
Some Key Norms of Listing Agreement &
SEBI ICDR
Pantomath Capital Advisors Pvt. Ltd. (SEBI Registered Category I Merchant Bankers) – A Pantomath group entity
25
SEBI ICDR As Applicable to SMEs
SEBI ICDR applies to SME listing with specific relaxations
 Offer document requirements and eligibility norms relaxed
 Appointment of Merchant Banker, and other intermediaries required
 Lead Merchant Banker to the issue,
 Rights , obligations and responsibilities relating to disclosures, allotment, refund, and
underwriting obligations
 Book building or fixed priced issue permitted
 Lock-in conditions apply

20% of post-issue capital to be locked in for 3 years; balance promoter shareholding
to be locked in for 1 year

Non-promoter pre-IPO shareholding to be locked in for 1 year with exception to
ESOP shares and shares held by VCF or FVCIs for more than 1 year pre IPO

Locked-in shares permitted to be transferred inter se promoters incl. new
promoter(s)
Pantomath Capital Advisors Pvt. Ltd. (SEBI Registered Category I Merchant Bankers) – A Pantomath group entity
26
SME Listing Agreement
All SMEs getting listed need to enter into Listing Agreement (LA) with the relevant stock
exchange.
BSE and NSE has adopted model LA released by SEBI.
Key Requirements include the following :
 Half-yearly results (Audit / limited review)
 Half-yearly shareholding pattern
 Advance notice of Board meetings with specified agenda (e.g. dividend, bonus, buy
back etc.)
 In-principle approval for any further issuance of shares
 Disclosure of price sensitive information
 Annual report containing inter alia full financials, consolidated financials, related
party disclosures etc. to be uploaded on corporate website
 Full annual report to be emailed; Abridged annual report to shareholders not on
email ids
 Compulsory migration to main board after the cut- off ceiling
Pantomath Capital Advisors Pvt. Ltd. (SEBI Registered Category I Merchant Bankers) – A Pantomath group entity
27

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