Retail investors need greater access to SME IPOs, regulatory process tightened

economictimes.indiatimes.com:

Valtrust (formerly Valturst capital), is a Delhi-based multi-family office, offering investment advisory to families and individuals to grow their wealth and ensure inter-generational wealth transfer. Rahul Bhutoria, Valtrust's director and co-founder, assists families in managing their onshore and offshore investment portfolios. He shared insights on a broad range of topics related to SME IPOs during his conversation with ET Online.

According to him, although SME IPOs are becoming popular, retail investor involvement is still limited. Initially aimed at sophisticated investors, SME IPOs could gain from the inclusion of retail investors to expand the capital base and enhance visibility for SMEs. He advocates for a more stringent SME IPO regulatory process, including comprehensive pre-IPO scrutiny, akin to mainline IPOs.

Edited excerpts:

ET: The market’s noticeably high focus on the country’s SMEs was strong in 2023 and that has continued in 2024. Has SME IPOs successfully met the equity needs of small businesses? Rahul Bhutoria (RB): While the SME IPOs have garnered unprecedented interest, the participation of retail investors has been limited. Initially, the SME IPO process was relatively new, and it primarily targeted sophisticated investors.

However, since some time has now passed, it may be beneficial to allow for some retail participation. One of the major objectives of allowing SME IPOs was a wider capital base through the participation of public investors, which has largely been achieved. It has brought the SMEs better visibility too, however, there are still a few things that need improvement for a better SME equity ecosystem.