Consider yourself warned about Pace E-Commerce
The company’s smooth listing on the BSE SME platform despite a dubious track record shows how lax scrutiny of the IPO process puts public investors at risk.
Why read this story?
Editor's note: You may have heard of Cot & Candy, an e-commerce website that sells children’s furniture, bedding, toys and so on. In case you haven’t, which is hardly surprising, the company was founded in 2015 and its revenue is all of Rs 10 crore. Yet, this month, the parent, Pace E-Commerce Ventures Ltd, listed on BSE’s platform for small and medium enterprises—a little over a month after filing its draft prospectus. The company raised Rs 41 crore in fresh capital, pricing its shares at Rs 103 each, giving it a discounted price-to-earnings ratio of 343; existing shareholders sold shares worth Rs 25 crore. The firm’s market capitalization stands at Rs 260 crore. Ideally, Pace E-Commerce’s initial public offering should highlight the opportunities that such a listing brings for promoters who don’t want to lose control of their SMEs by giving private investors a significant stake; they can access equity funds from public shareholders at a high premium instead. Besides, such startups can choose to grow at their own pace, steering clear of private equity investors obsessed with the size of startups …
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