Analysis and Insights into the world of IPOs and investing in India

Thursday, February 23, 2012

Lot sizes for SME IPOs

The market watchdog SEBI has announced the lot sizes for SME IPOs. Recently, BCB Finance Ltd. has come up with a Fixed Priced Issue which is the first IPO in the BSE SME category 

According to the announcement, Companies in the SME sector entering the capital markets will be prescribed 'lot sizes' for shares in an initial public offering. In a circular released on Tuesday, the capital market regulator SEBI mandated specific lot sizes for IPOs in different price bands. For a price band of up to Rs.14, the lot size would be 10,000 shares. For a band of Rs 14-18, the lot size has been fixed at 8,000 shares. As the value of the price band progressively increases from Rs.14 to above Rs.1000, the number of shares in the lot size decreases from 10,000 shares to 100 shares


The circular clarifies that if the price during the public offering stage falls between two different price bands, then the minimum allotment size would be decided on the higher price band. For example, if the proposed price band is Rs.12 to Rs.16, then the lot size would be 8,000 shares as it would then fall into the Rs.14 to Rs.18 price band bracket

The stock exchanges can review the lot size once in every six months or whenever warranted, by giving an advance notice of at least one month to the market. Further, the stock exchanges should ensure that the lot size will be the same for securities traded across the exchanges
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