EvenTions SME IPO requires individual bids above Rs 2 lakh

EvenTions requires each individual investor to bid for at least two lots with an application amount exceeding Rs 2 lakh in its small and medium enterprise initial public offering, or SME IPO. The requirement is prescribed for the issue under Regulation 267 of the Securities and Exchange Board of India’s Issue of Capital and Disclosure Requirements Regulations, 2018, despite an individual allocation of at least 35% of the net issue.

Why must an EvenTions SME IPO application exceed Rs 2 lakh?

EvenTions requires an individual application to cover a minimum of two lots and exceed Rs 2 lakh because the issue is governed by Chapter IX of the SEBI Issue of Capital and Disclosure Requirements Regulations, 2018. Regulation 267 states that the minimum application size in an SME issue shall be two lots per application and above Rs 2 lakh, and the issue-structure table repeats this condition for individual bidders.

The Rs 2 lakh threshold is the minimum application amount, not the final issue price or a promise of allotment. EvenTions has proposed to issue up to 32,30,400 equity shares with a face value of Rs 10 each, but the issue price is unspecified. The prospectus says the number of shares issued may vary following adjustment of the lot size after finalisation of the issue price and the basis of allotment.

The applicable lot size will depend on the final price under SEBI’s February 21, 2012 SME lot-size circular. That framework sets lots from 10,000 shares for an issue price up to Rs 14 to 100 shares for an issue price above Rs 1,000. EvenTions states that the IPO application lot, allotment lot and secondary-market trading lot will be the same, but its final lot size is not yet stated.

How much of the issue is available to individual bidders?

EvenTions makes not less than 35% of its net issue available to individual bidders. Non-institutional bidders receive not less than 15% of the net issue, while qualified institutional buyers, or QIBs, may receive up to 50%; those percentages apply to the public net issue rather than to the whole offering.

The proposed issue consists of up to 32,30,400 equity shares. Up to 1,62,000 shares are reserved for the market maker, leaving a net issue of up to 30,68,400 shares for public allocation. The market-maker reservation represents 5% of the total issue, while the total issue and net issue represent 26.51% and 25.18%, respectively, of EvenTions’ post-issue paid-up equity share capital.

The 35% individual allocation is a category reservation rather than an allotment assurance. The prospectus says allotment to each individual bidder shall not be less than the minimum bid lot, subject to the availability of equity shares. Under Regulation 268, EvenTions must also ensure that the number of prospective allottees is not below 200.

How does the SME issue structure determine the entry threshold?

EvenTions is proposing to list on NSE Emerge, the SME platform of the National Stock Exchange of India, or NSE. The issue is made under Regulation 229(2) of Chapter IX, which applies to an issuer with post-issue paid-up capital of more than Rs 10 crore and less than Rs 25 crore seeking an SME Exchange listing.

The two-lot and above-Rs-2-lakh individual application condition therefore arises from the stated SME regulatory structure. EvenTions is using the book-building process, under which bids are collected during the issue period before the basis of allotment is finalised. The prospectus also states that bidding at the cut-off price is not available to any bidder category in this issue.

The non-institutional portion has a separate internal split. One-third of that portion is reserved for applicants bidding for more than two lots up to an amount not exceeding Rs 10 lakh, while two-thirds is reserved for applications exceeding Rs 10 lakh. Any unsubscribed portion in either non-institutional sub-category may be allocated to applicants in the other sub-category, subject to the stated conditions.

How are funds blocked and released for individual applications?

EvenTions requires applicants to use the Application Supported by Blocked Amount, or ASBA, process, including the Unified Payments Interface, or UPI, mechanism for eligible individual applications through syndicate ASBA. Under ASBA, the full bid amount is blocked by a Self Certified Syndicate Bank, or SCSB, in the applicant’s designated account, or by the sponsor bank through UPI where applicable.

An application can be rejected if it is not uploaded to the electronic bidding system or if the full bid amount is not blocked in the relevant ASBA account or through the UPI mechanism. For individual IPO applications up to Rs 5 lakh made through designated intermediaries, the prospectus states that UPI applies under the SEBI framework. The minimum individual application above Rs 2 lakh falls within that Rs 5 lakh application band only where the bid does not exceed Rs 5 lakh.

For specified delays in unblocking funds, the prospectus provides compensation of Rs 100 a day or 15% a year of the relevant bid amount, whichever is higher. The standard applies to delays exceeding three working days for cancelled, withdrawn or deleted ASBA forms, and is also stated for multiple UPI blocks, excess blocking and delayed unblocking of non-allotted or partly allotted bids, subject to the respective conditions.

What does the market-maker reservation change after listing?

EvenTions reserves up to 1,62,000 equity shares for the market maker, a firm allotment equal to 5% of the 32,30,400-share issue. The book running lead manager must ensure compulsory market making through registered market makers on NSE Emerge for at least three years from the date of listing.

The market-maker allocation is outside the 30,68,400-share net issue used to calculate allocations for QIBs, non-institutional bidders and individual bidders. This means the individual allocation of at least 35% is based on the net public issue, whereas the 5% market-maker reservation is measured against the total issue. EvenTions also says the issue is 100% underwritten under Regulation 260.

The prospectus gives the market maker a role in handling holdings below the minimum trading contract size. Although regular trading will occur in the prescribed minimum contract size, the market maker is to buy a shareholder’s entire holding in one lot where that holding’s value is below the minimum contract size allowed on NSE Emerge. This post-listing mechanism does not change the minimum two-lot, above-Rs-2-lakh IPO application condition.

Conclusion

EvenTions combines an individual allocation of not less than 35% of its net issue with a mandatory application of at least two lots exceeding Rs 2 lakh. The threshold follows the SME issue rules cited in the prospectus, while the market-maker reservation, QIB allocation and non-institutional allocation are calculated under separate parts of the offer structure.

The next disclosed item to watch is finalisation of the issue price and resulting lot size, because EvenTions says the number of shares may change after lot-size adjustment and the basis of allotment. EvenTions also reserves the right, in consultation with the book running lead manager, not to proceed with the issue before allotment, and listing remains subject to final NSE approval.