Gretex Share Broking, a mumbai-based market maker that helps SME companies access public markets, is now looking to raise funds for itself through the primary market route. The company has filed its draft red herring prospectus (DRHP) with the capital markets regulator Sebi for an IPO.
The public offer, with a face value of Rs 10, comprises a fresh issue of 1.67 crore shares and an offer-for-sale (OFS) of 30 lakh shares.
Under the OFS, Sashi Harlalka will sell 8.58 lakh shares, Sumeet Harlalka will offload 8.58 lakh shares and the rest will be sold by Alok Harlalka.
The offer is being made through the book-building process, wherein 50% of the offer will be reserved for qualified institutional buyers, 15% for non-institutional investors, 35% for retail investors.
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The company, in consultation with the book-running lead managers, may consider a further offer of equity shares of up to 33.12 lakh shares as pre-IPO placement. If such placement is completed, the fresh issue size will be reduced.
The proceeds from the fresh issue will be used for funding the working capital requirements of the company and general corporate purposes.
Over its decade-long history, Gretex Share Broking served as a market maker for 31 companies listed on SME platforms of stock exchanges. Additionally, it holds a memorandum of understanding (MOU) with Gretex Corporate Services, its promoter, to act as market makers for 28 upcoming SME IPOs.
The activities of market-making involve both fund-based and fee-based operations. Gretex Broking earns fixed fees from corporations for its market-making services, including one-time and annual fees. Moreover, the company aims to generate revenue through spreads and other trading activities in the secondary market, including various stocks.
For fiscal 2022–23, the company’s revenue from operations has increased to Rs 103 crore against Rs 39.66 crore in fiscal 2021–22. Profit after tax increased to Rs 46.75 crore in the same period as compared to Rs 8.55 crore for Fiscal 2022.
For the four months ended July 31, 2023, revenue from operations stood at Rs 20.92 crore and profit after tax stood at Rs 6.11 crore.
Over the recent years, SMEs listing in the capital markets has seen traction. For instance, during FY23, the SME market witnessed sturdy growth with 125 issues, representing an increase of 79% as compared to 70 issues in FY22. During April-July 2023, the IPO issues of SMEs reached 47 from 29 compared to the corresponding period last year, according to a CareEdge Report.
Pantomath Capital Advisors is the sole book-running lead manager for the IPO, and Bigshare Services is the registrar of the offer. The equity shares are proposed to be listed on the BSE and NSE.
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