PHDCCI, BSE sign MoU to help MSMEs raise funds through IPOs

The PHD Chamber of Commerce and Industry (PHDCCI) has signed an MoU with BSE Limited to help MSMEs access financing via IPOs. The partnership aims to create awareness among enterprises about the benefits and process of listing for business expansion.

PHDCCI and BSE Forge Partnership for MSME Growth

The PHD Chamber of Commerce and Industry (PHDCCI) has signed a Memorandum of Understanding (MoU) with BSE Limited to help micro, small and medium enterprises (MSMEs) access financing opportunities through initial public offerings (IPOs), with a focus on creating greater awareness about the benefits and process of listing.

Speaking after the MoU signing ceremony, Ranjeet Mehta, CEO and Secretary General, PHDCCI, told ANI on Monday that the partnership aims to help MSMEs raise funds for business expansion and make them aware of equity financing opportunities available through the public markets. "This MOU is to help our members get finances for the business through IPO. This is particularly for MSMEs. However, the entire industry can take advantage of this MOU," Mehta said.

Awareness and Education at the Core

He said accessing funds at a reasonable cost remains a major challenge for MSMEs, while many of the country's around 8 crore MSMEs are also not fully aware of the government schemes and financing avenues available to them. "The basic objective of this MOU is to conduct awareness programmes at the state level, district level and to tell MSMEs about how they can really take advantage of getting the funds through IPO," Mehta said.

Under the partnership, BSE officials will educate MSMEs about the listing process, benefits of becoming a listed company and how raising funds through IPOs can help businesses scale up. The initiative will also create awareness among enterprises about raising finance through equity from the public.

Addressing SME Concerns About Listing

Sundararaman Ramamurthy, Managing Director and Chief Executive Officer, BSE Limited, said SMEs often hesitate to pursue listing due to concerns related to finance, corporate governance and the additional compliance requirements associated with becoming a listed company.

"SMEs, small and medium enterprises... their subject matter is finance, corporate governance, and they don't know much about it. They don't have the capacity to learn all this. So they are afraid that if they get listed, what will I have to learn? This is the second problem," Ramamurthy said.

Finding the Right Merchant Banker

He identified finding an appropriate merchant banker as another key concern for SMEs, particularly smaller businesses seeking specialised guidance through the listing process. "The third problem is that they think that they should get the right merchant banker. We are small, we need someone special for us. Will we get a merchant banker who will take care of our requirements, will not fleece us, will be of good quality, will guide us in the right direction," he said.

Unlocking Value and Accessing Risk Capital

Ramamurthy also highlighted confidentiality concerns among family-owned businesses, where business information is often closely guarded. However, he said listing can enable family-run enterprises to unlock the value of their businesses while retaining a certain level of ownership and control. Listing also provides access to risk capital beyond conventional bank financing.

"So apart from bank finance, you will get risk capital. If you perform well, you can move forward. You can unlock value," Ramamurthy said. According to Ramamurthy, around 760 companies across 27 states have raised Rs 17,000 crore from the market, while their combined market capitalisation stood at around Rs 2 lakh crore. Around 200 companies have subsequently moved to the main board, he added.

The PHDCCI-BSE partnership is expected to strengthen awareness among MSMEs about capital-market financing and encourage more enterprises to consider IPOs as an avenue for raising growth capital.

(Except for the headline, this story has not been edited by Asianetnews Editorial staff and is published from a syndicated feed.)