Can Sebi curbs cool the SME IPO rush?

The number of small businesses going public grew at a slower pace this year as stringent regulatory requirements to curb frenzy and unfavourable macro economic conditions dampened issuances.

- Srushti Vaidya

The number of initial public offerings (IPOs) on the small and medium enterprises (SME) platforms grew 12.5% so far this year compared with a 31% surge in 2024, according to a report from Pantomath Capital Advisors.

The Securities and Exchange Board of India's (Sebi's) regulatory curbs significantly contributed to the slowdown by tightening eligibility, governance, and fund-use norms starting late 2024 and into 2025, said Jay Jhaveri, partner at Bhuta Shah and Co. LLP. These changes aimed to curb misuse and speculation, but made listings harder for some SMEs, he said.

Along with these policy-level changes, trade and other macro factors were also at play, according to Manick Wadhwa, director at SKI Capital. “After the US elections and the new president taking charge in January, macroeconomic headwinds began to emerge, and April and May saw a lull due to geopolitical tensions between India and Pakistan, which impacted IPO activity.”