Solar91 Cleantech IPO in Trouble? BSE Halts Issue After Social Media Red Flags
BSE Postpones Solar91 Cleantech IPO Due to Concerns
The Bombay Stock Exchange (BSE) postponed the initial public offering (IPO) of Solar91 Cleantech just one day before its scheduled opening on December 24, 2024. The postponement followed concerns raised on social media regarding the company's rapid valuation increase and recent regulatory changes by the Securities and Exchange Board of India (SEBI) concerning the use of IPO proceeds. BSE stated that it needed to further examine the queries raised.
Reacting to the concerns raised, the BSE issued a circular stating that it needed time to examine the queries raised in the media. The IPO bidding process for both anchor investors and the public was postponed until further notice.
Concerns Raised on Social Media
Social media users alleged that Solar91 Cleantech increased its valuation by 2.5 times in just a month, raising red flags. This postponement comes after SEBI's recent crackdown on the SME market, including stricter rules regarding financial stability before IPOs.
About Solar91 Cleantech and its IPO
Solar91 Cleantech, promoted by four IIT graduates, specializes in providing EPC solar energy solutions to commercial and industrial clients. The company had planned to raise Rs 106 crore through its IPO, with shares to be listed on the BSE SME platform. The IPO consisted entirely of fresh equity shares issued at a price band of Rs 185-195. Proceeds were intended for investment in a subsidiary for developing solar plants, working capital requirements, and general corporate purposes.
New SEBI Rules on SME IPOs
SEBI has recently approved measures to strengthen the SME IPO market and protect investors. These measures include:
- Companies seeking to list on SME exchanges must demonstrate an operating profit of Rs 1 crore in at least two of the last three financial years.
- Selling shareholders cannot offload more than 50% of their holdings during the IPO.
- Companies cannot use IPO proceeds to repay loans taken from promoters, directors, or related parties.
The objective of these regulations is to ensure that only financially sound businesses are permitted to enter the market, to prevent the misallocation of funds, and to ensure that the capital raised is utilized for its intended purposes. The postponement of the Solar91 Cleantech initial public offering (IPO) by the Bombay Stock Exchange (BSE) signifies a heightened level of scrutiny from the regulator concerning the SME market. It remains to be determined when the IPO will ultimately be available for subscription and subsequent listing.
Disclaimer: Investing in SME IPOs involves a high degree of risk. Such investments may be suitable only for investors with a high-risk tolerance and the ability to bear potential losses. Perform thorough due diligence and consult a financial advisor before investing. Invest wisely and at your own discretion.