BCB Finance, the first company to list on small and medium enterprises (SME) platform of the Bombay Stock Exchange (BSE) made a lukewarm debut after listing at Rs 27 a share, 8 per cent premium to its issue price, but closing the day at Rs 25.7 a share or just 2.8 per cent above the IPO price on Tuesday.
The IPO did not see any institutional investor bet on the company and all public shareholding is under individual shareholders and corporate entities. Bulk of public holding is with non retail investors(who hold shares worth over Rs 1 lakh). The Mumbai-based NBFC which is primarily engaged in the business of advancing loans and investing/trading in securities, raised Rs 8.85 crore in its IPO.
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.
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 issue involved 3.54 million fresh shares at a price of Rs 25 each. It diluted a little over 30 per cent in the issue while the rest will remain with the promoters. Aryaman Financial Services was the lead manager to the issue.
The performance of the company will be keenly followed as a test case for other SMEs to eye a listing on a public bourse. Even as the absence of institutional investors may be seen as a dampener, the debut listing on the new trading platform of BSE could prompt other smaller firms to go public instead of looking for venture capital or small ticket private equity deals.