The social stock exchange (SSE) saw its first listing on Wednesday, with SGBS Unnati Foundation becoming the first entity to take this route to avail financing.
The foundation—engaged in vocational training of youth—raised Rs 1.8 crore from four investors, including brokerage firm Zerodha and Nabard, for training up to 10,000 graduates from government colleges for employment. It was open between October 30 and November 22.
Coined as a game-changer for social enterprises to raise funds, the SSE—facilitated by both BSE and the National Stock Exchange (NSE)—enables investors to subscribe to zero coupon zero principal (ZCZP) bonds of non-profit organizations (NPOs), which are backed with robust standards of social impact and financial reporting.
“We hope that this will change the social fabric of this country. We have a point to prove because every major country, whether it is the US, UK, Canada, Singapore, have attempted this in various formats and failed. In the social stock exchange space, we hope that we will be the real ‘jagatguru’,” said R Balasubramaniam, Chairman, Social Stock Exchange Advisory Committee of the Securities and Exchange Board of India (Sebi).
Exchange officials said that 3-4 more NPOs could get listed by March 2024. As per the NSE website, there are 38 NGOs registered with SSE, including Unnati.
“SSE was envisaged to create an ecosystem that fosters social innovation, inclusion, and impact. SSE aims to provide a transparent and credible mechanism for investors to identify, evaluate, and support social ventures that are creating positive change,” said Ashwani Bhatia, whole-time member, Sebi.
To make SSE open for much wider retail participation, Sebi recently reduced the minimum application size from Rs 2 lakh to Rs 10,000. Another major decision has been to reduce the minimum issue size to Rs 50 lakh from the previous Rs 1 crore threshold. This would enable NPOs to raise lower amounts too through the SSE route. The notifications for these changes are still awaited.
Acting on the feedback received from stakeholders, the market regulator had also eased compliance by changing the nomenclature of ‘social auditor’ to ‘social impact assessor’.
While focusing on outcome-based investing, Ajit Kesari, Additional Chief Secretary, Government of Madhya Pradesh Department of Finance said that the state governments could help take projects of social enterprises to a much larger scale.
– SGBS Unnati Foundation becomes first listed social enterprise on SSE
– Exchange officials expect 3-4 more listings in this financial year
– Social enterprises can raise money through Zero Coupon Zero Principal bonds; mechanism approved by Sebi
– SSE listings facilitated by both the stock exchanges
– To promote the platform, Sebi has reduced minimum application to Rs 10,000 from Rs 2 lakh; issue size also cut down