Beyond IPOs and FPOs, Ashish Kacholia, Zerodha invest in NPO which gives zero return

Away from the flurry of IPOs hitting Dalal Street in the last few days of December, star investor Ashish Kacholia and broking firm Zerodha have quietly invested in an NPO which got listed on the Social Stock Exchange this week.

NPO stands for not-for-profit organisation and investors can't expect anything in return for buying zero coupon zero principal (ZCZP) instruments.

Unlike investments in IPOs, FPOs and NFOs, you don't get any interest, capital appreciation, dividend or even your capital back. The instrument, however, does get credited to demat accounts of investors but its value will become zero after the project for which the fundraiser was done gets completed.


On Wednesday, Bengaluru-based NPO SGBS Unnati Foundation, which runs vocational training programs for unemployed, raised Rs 1.8 crore from two HNIs and another two institutional investors.

Smallcap czar Kacholia, known for his multibagger picks, invested Rs 30 lakh while Zerodha generously invested Rs 1 crore. Other two investors are NABARD and HNI Govind Vaidiram Iyer.

"Unlike companies, we do not have merchant bankers to help us raise funds. A platform like SSE will eventually help us reach out to newer investors because it adds to the credibility of the fundraising exercise," Ramesh Swamy of Unnati told ETMarkets.

What is social stock exchange?
Social Stock Exchange (SSE) is a separate segment in BSE and NSE to help NPOs raise funds for projects that have a positive social impact.

After registering with SSE, NPOs can issue zero coupon zero principal instruments through private placement or public issuance. Just like companies file for IPO, NPOs can also file fundraising document with the Social Stock Exchange to seek in-principle approval to list Zero Coupon Zero Principal (ZCZP) Instruments on Social Stock Exchange.

Last month, Sebi had reduced the minimum issue size for ZCZP by NPOs on SSE from Rs 1 crore to Rs 50 lakh. To encourage retail participation, the regulator has also reduced the minimum application size from Rs 2 lakh to Rs 10,000.

"Already close to Rs 25,000-30,000 crore is spent by Indian corporations on CSR. So there is a big market for NPO to raise funds. It is an opportunity for those who want to do social work and make an impact. There is now no dearth of funds for good work," said Makarand M Joshi of MMJC & Associates.

Countries like Brazil, Portugal, South Africa, the UK, Canada and Singapore already have established Social Stock Exchanges.

Currently, there are 39 registered NPOs on NSE SSE Platform and amongst these, several NPOs have already initiated their fund-raising process across developmental areas such as education, skilling, agriculture, and poverty alleviation of tribal farmers.

"This framework offers a host of advantages such as transparency, trust, efficiency, cost savings, discoverability, impact measurement and outcome-based philanthropy. By aligning the dual goals of corporate success and societal impact, SSE creates a space where philanthropists, impact investors, donors, and NPOs converge - each contributing to a shared vision of a more equitable and sustainable future," said Ashishkumar Chauhan, MD & CEO of NSE.

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