After mooting the idea of separate SME platform, market regulator Securities and Exchange Board of India (SEBI) is now working on a platform for start-up companies to help them access capital and remove other obstacles.
The proposed platform, unlike the one for the SMEs, will also allow start-ups to list without IPOs, Sivasubramanian Ramann, Executive Director, SEBI told a private equity forum here.
After much prodding by SEBI and the government, both the BSE and NSE have already launched separate platforms for small and medium enterprises (SMEs), who can access markets without filing the long red herring prospects as well as prior SEBI permission.
In the FY14 Budget, the Finance Minister P Chidambaram proposed allowing SMEs and the start-ups to list on the exchanges without the mandatory initial public offering (IPO) process so long as the issuance of the securities is limited to ‘informed investors’.
The move is also aimed at allowing SMEs and start-ups to list their shares issued on the basis of private placements to a maximum of 49 investors at a time, thereby providing a certain level of liquidity for early stage investments in SMEs and start-ups.
This will also give venture and private equity investors an additional exit route which they might find attractive.
Globally, AIM is the London Stock Exchange’s international market for smaller growing companies.
A wide range of businesses including early stage, venture capital backed as well as more established companies join AIM seeking access to growth capital.