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.
These include brokerage firm Zerodha and National Bank for Agriculture and Rural Development (Nabard).
The funds will be utilised for job training to around 10,000 graduates from government colleges.
The issue 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 organisations (NPOs).
The ZCZP is backed by robust standards of social impact and financial reporting.
“We hope that this will change the social fabric of the country. We have a point to prove because every major country, whether it is the US, UK, Canada or Singapore, have attempted this in various formats and failed.
"In the social stock exchange, 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 three-four more NPOs may get listed by March 2024.
According to the NSE website, there are 38 NGOs registered with the SSE, including Unnati.
“SSE was envisaged to create an ecosystem that fosters social innovation, inclusion, and impact.
An 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 the SSE open to 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 will enable NPOs to raise lower amounts through the SSE route. Notifications are still awaited for these changes.
Acting on the feedback received from stakeholders, the market regulator had also eased compliance with the change in nomenclature of ‘social auditor’ to ‘social impact assessor’.
While focusing on outcome-based investing, Ajit Kesari, additional chief secretary, Government of Madhya Pradesh’s department of finance, said state governments could help take projects of social enterprises to a much larger scale.
“The moment Sebi came up with its guidelines in 2022, we kept aside Rs 100 crore in the next Budget (March 2023) for the social impact bonds,” he added.
