The Bombay Stock Exchange (BSE) is set to see the first company listing on its small and medium enterprises (SME) platform, as the subscription for the Rs 8.85 crore IPO of BCB Finance, a Mumbai-based NBFC (non-banking finance company), kicks off tomorrow. BCB Finance is primarily engaged in the business of advancing loans and investing/trading in securities.
The issue comes even as the market regulator SEBI has issued a circular, standardising the trading of lots of shares on SME exchanges. This will be determined by the price band of the issue – the higher the price band, the smaller the lots. With BCB’s IPO at Rs 25 per share, it would mean lots of 6,000 shares.
Issues on the SME platform of the BSE also require a market maker for a minimum period of three years. Market maker quotes both a buy and a sell price in a financial instrument or commodity held in inventory. IKAB Securities & Investment is the market maker for BCB Finance.
The issue involves 3.54 million fresh shares at a price of Rs 25 each. Also, 0.64 million shares have been reserved for market makers. BCB Finance will be diluting a little over 30 per cent in the issue while the rest will remain with the promoters. The issue will open on February 23 and close on February 27.
Aryaman Financial Services is the lead manager to the issue.
BCB Finance is an NBFC promoted by the Bagri Family, who has also promoted the stock broking firm BCB Brokerage Pvt Ltd.
The company reported total income of Rs 1.47 crore in FY11 from its NBFC activities, compared to Rs 1.54 crore in FY10. The net profit in this period fell from Rs 27.16 lakh to Rs 25.81 lakh. For the six-month period ending September 2011, BCB Finance reported total income of Rs 1.38 crore and net profit Rs 12.18 lakh.
The funds raised from the IPO will be used by BCB Finance to expand its capital base and scale up its NBFC activities. It will use Rs 7.5 crore to invest in shares, loans against shares and IPO funding besides paying for the current overdraft facility.