More than an innovative exit route
Important Facts:
- SEBI has introduced relaxation measures for startup companies to raise funds and get their shares traded on stock exchange
- The ‘Institutional Trading Platform'(ITP) created by SEBI for listing of companies has been renamed as ‘Innovators Growth Platform'(IGP)
Benefits of Innovators Growth Platform:
- IGP helps investor in StartUp to divest their shares without making a public offer
- IGP provides more profitability and have less stringent measures than other platforms like SME platform or main board of exchanges (NSE, BSE)
- IGP allows startup to trade its share under regular category on main board platform after one year of listing instead of two year earlier
- Widened investor base which includes in addition to Qualified Institutional borrowers – Family trust, Pooled investment fund and Pre listing investors or Accredited investors
- Reduced the minimum application size for investors from Rs 1 million to just Rs 200,000.
- Removal of current ICDR (Issue of Capital and disclosure requirement) norms which caps single entity holding not more than 25% of the post issue capital
Concerns for IGP:
- Needs to look beyond listing into post listing interest generation in such securities
- Needs to improve liquidity in companies already listed on the platform for benefit of investment in future startups
Way forwards for IGP:
- Besides providing easy exist to existing startup companies, IGP can become fund base for future growth of startups
- SEBI need to relax rule of listed startup not making Initial public offering
- IGP could acts as platform for showcase eligible startup for investors to park in money
- SEBI could consider introducing market makers at IGP for active secondary market for startup investment
