SME IPOs face steep declines and regulatory changes

A small and medium enterprise (SME) IPO that saw over 400 times subscription last year has now dropped 50% in value. The IPO raised Rs 12 crore but has raised concerns about sustainability in the market. In response to the volatility, the Securities and Exchange Board of India (Sebi) has introduced stricter regulations. New rules require SMEs to show profitability and limit the offer-for-sale component to 20% of the total issue size. As a result of these measures, SME IPO subscriptions have significantly decreased this year, with the highest recent subscription at only 44 times. Grey market activity has also nearly disappeared.