Metropolitan Stock Exchange gears up for USD 100 million fund for MSMEs and Startups by partnering with Delamore Group and DTM Global Holdings from Canada and their partners
Metropolitan Stock Exchange of India Limited (MSE), country’s third national level exchange announced its tie-up with DTM Global Holdings and their partners to bring next generation technology enabled and globally successful platforms to cater to the needs of MSMEs as well as startups. MSE is looking at starting with a USD 100 million fund, which will be specifically targeted towards MSMEs and startups in India. The funds shall be used for investing in startups and exchange platforms including stressed assets with a purpose to deleverage bank balance sheets and improve credibility in the financial system.
fund going upto 250mn usd targeting atleast 20% of the market over the next 3 years In association with DTM and the exchange, MSE will launch innovative platforms focused on creating liquidity and enhancing efficiency across board.
Several initiatives are being worked upon under the partnership. MSE in partnership with DTM Global Holdings plans to introduce two marquee platforms VentureXchange and Go-LiquidX. While VentureXchange is aimed to open up newer avenues for growth of the MSME and Start-up ecosystem, Go-LiquidX will be focused on creating liquidity in the distressed and non-performing loan sector. Another initiative is to launch a platform to enable listing of AIFs (Alternative Investment Funds) to facilitate the growth of the AIF industry. This will address the concerns of VCs and investors who face the challenge of illiquidity, i.e., their investment is locked for the fund term ranging anywhere from 5 to 10 years. The model wills turbo charge micro VCs creating exit and liquidity at the fund level. Portfolio companies on achieving growth and size will list on VentureXchange - main market as per laid down criteria.
The idea is to be the enabler and create a tech enabled Liquidity Bridge that will offer a range of exit options to existing investors, which in turn will encourage them to reinvest in more start-ups. Global and local market research companies as well as MSMEs, through a planned reaching out strategy, will play a role in attracting both local and overseas investors to trade the Indian markets.
Commenting on the development Mr. Kunal Sanghvi, CFO, Metropolitan Stock Exchange (MSE) said “This association will further strengthen our knowledge and technology capabilities. We are looking at starting with a USD 100 million fund going up to USD 250 million in the next 3 years. This will also enable us to garner a 20% market share in the same time frame. The purpose of launching the exchange platforms is to create more bandwidth for attracting investors as well as participants on a broader basis to create a more conducive financial environment leading to more flexibility and resource mobilisation whether financial technical or operational. From the business perspective, we see a massive opportunity and scope in development of the MSME and start-up ecosystem. We are committed to introduce robust platforms for development of both Equity and Debt Market segments. With DTM Global Holdings as partners, there will be an added acceleration to rollout programs. We are targeting the NPA market which is today at about 9 lakh crores, the startup market which is close to approximately 1USD 15 billion and the MSME market which is approximately USD 2 Billion."
Elaborating Further on the strategic tie-up Mr. Sanjeev Kumar said “India Inc. is at a crossroad, and for the country to leverage its full potential, it will need a deep capital market, the over reliance on banks to finance India’s growth has limitations. With MSE, we plan to build a vibrant ecosystem to support MSMEs and the overall economy. And this is why we believe that our tie-up with MSE is coming at an opportune time, and we are looking forward to growing with MSE”.
VentureXchange will be a pioneering platform with innovative ecosystem focused on being the liquidity bridge for the enterprising India and Indian youths. The platform will enable Micro VCs as well as NBFCs and SMEs along with startups raise finance through equity and debt directly from international as well as local investors. The platform will also enable market participants to get exit from their existing investment freeing up more cash for additional investment in the economy.
Go-liquidX will provide platform for trading of distressed and other non-performing loans, subject to regulatory approvals in India. An established standardized process will govern the overall trading of the underlying assets meeting the regulatory requirements. This will be modeled along the needs of the market incorporating the existing innovations in the developed world. As this is a new concept in India, involvement of all stakeholders will be necessary and a regulatory framework will have to emerge.
As an innovation, Go-liquidX is planned to help solve the problem of non-performing and distressed assets held in the banking system of the country as well as the ARCs. This platform will create a new market place, to enable the banks as well as existing ARCs to exit their current holdings of the NPA/NPLs, subject to regulatory approvals in India. What is missing in India especially on the distressed assets side is a standardized process to help banks create ask/ bid for an asset that it wants to exit. Equilibrium in offer and bid prices is essential for revival of the NPA market. Market forces and participants best resolve this issue. By enabling a process under a regulatory framework, whereby ARC’s security receipts will be securitized in an asset-backed-security (ABS) and listed on the exchange, investors from across the world will be able to buy into available opportunities in the distressed asset class, which will lead to liquidity and efficient pricing. The open process will make the system world class. Developed markets are quite used to the idea. Also, going forward, issue of discounted special opportunity bonds backed by NPA/ NPLs can also be considered.
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