SEBI Proposes Higher Investment Threshold for SME IPOs

SEBI has proposed raising the minimum application size for SME IPOs to up to Rs 4 lakh. This aims to ensure participation by informed investors with adequate risk appetites. The move follows a significant rise in SME issues and increased retail individual participation, prompting the need to protect smaller investors.

Markets regulator SEBI has proposed raising the minimum investment threshold for SME IPOs, aiming to attract only informed investors with sufficient risk tolerances. The new limits, potentially increasing up to Rs 4 lakh, seek to protect smaller investors amidst a surge in SME offerings.

The proposal comes in response to a dramatic increase in investor participation in SME IPOs, with the applicant-to-allotted investor ratio soaring from 4 times in FY22 to an astonishing 245 times in FY24. This rise highlights the growing interest in these offerings.

The Securities and Exchange Board of India is inviting public feedback on these proposals until December 4, aiming to enhance the credibility and stability of the SME segment by limiting smaller investors' participation and ensuring that only those with genuine risk appetites apply.

(With inputs from agencies.)