Volume : VI, Issue : VII, July - 2016

IPO as a source of funding for SME – An Overview

Dr. Shweta Anand

Abstract :

 The capital financing of SMEs through IPOs is a new initiative. The response has of the market as well as investors has been quite encouraging. The secondary market performance of debutant SME IPOs has also been very good. However, investment in SME stocks seems risky for investors. The reasons attributed for the same are that there is not enough liquidity and the turnover is also low. Keeping in view these problems, market regulator SEBI has issued guidelines to keep away small investors from investing in SME IPOs. However, to make the market liquid, SEBI guidelines stipulate that merchant bankers should act as market makers in such stocks for three years. However, after the stipulated period of three years, the stocks may face the problem of liquidity again. In order to avoid such a scenario, the present paper suggests the need for more transparency and increased institutional participation in companies listed on SME platforms. Also, stock exchanges where these companies are listed should provide sustained handholding to the managements of these companies.

Keywords :

Article: Download PDF   DOI : 10.36106/ijar  

Cite This Article:

Dr. Shweta Anand IPO as a source of funding for SME – An Overview Indian Journal of Applied Research,Volume : 6 | Issue : 7 | July 2016

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