A substitute to raising capital — Institutional Trading Platform

Acquiring capital for your business is easier said than done. With a recent development, small and medium enterprises (SMEs) have been invited to enlist their securities in the Institutional Trading Platform (ITP). It is a window on the stock exchange where e-commerce, data analytics and start-ups can trade without going public. The Securities and Exchange Board of India (SEBI) has relaxed some of the strict rules pertaining to the sector. Instead of the 3 years lock-in for IPOs, the invested capital will be locked in for only 6 months on the ITP.

Basically ITP is a secured and clear stage for investors with a simple entry and exit mechanism. It will turn out a suitable alternative to Growth Capital in India. This will be a booster for the Indian public market which has lost to other global markets previously. The Chinese market is leaps and bounds ahead in comparison. Indians are essential to the Silicon Valley enterprises and the local populace loses out on its benefits. The initiative will attract start-ups to list locally instead of going overseas which will expand the markets of India.

Eligibility

The company and the Board of Directors should have a clear CIBIL history. It should be clear of any petitions as well. Moreover, it shouldn’t be a sick company as defined by Board of Industrial and Financial Reconstruction (BIFR). The revenues of the company should be below 100 crore and the paid up capital shouldn’t exceed 25 crore. The company should also be free of regulatory action by SEBI, RBI, IRDA or MCA.

There are various other criteria that your company will have to adhere to. Please research and peruse before initiating the process.

The ROI of the companies have exponentially increased in the past years owing to the internet revolution. Although, the investors in India have lost out because many companies have opted to look for private equity funding or explored various other options. With the advent of institutional trading platform, SMEs will be able to take advantage of the boom in the e-commerce industry.

Benefits

Angel investors, VCFs and PEs have an advantage of easy entry and exit options. The listing is cost effective and the compliances are comparatively relaxed. The equity firms have transparent access to the functions of the company which helps in fund raising. The debt burden is reduced and the finances receive a boost. The company gets more recognition overall and has great opportunities for growth.