SME IPO

SME IPO is issued by small and medium-sized enterprises or startups with a post-issue paid-up capital not exceeding ₹25 crores. SME IPOs enjoy relaxed eligibility criteria, and their offer documents are vetted by the stock exchange.

These issues are listed on SME platforms like NSE Emerge or BSE SME.

The minimum investment in SME IPOs is ₹2 lakh, which is significantly higher than the ₹10,000–₹15,000 typically required for Mainline IPOs.

SME IPOs resemble regular IPOs, but are designed for smaller businesses not yet ready for the main stock market.

SME IPOs allow SMEs to:

• Raise capital to fund their operations, expansion, or other business goals.
• Gain visibility and recognition by being listed on a stock exchange.
• Create a more liquid market for their shares.

Key Points to Remember:

• They are typically listed on specialised platforms like the BSE SME or NSE Emerge platforms, which are specifically designed for smaller companies.
• SMEs must meet certain eligibility criteria to be listed on these platforms, which are generally more relaxed than those for mainboard IPOs.
• The process is similar to a regular IPO, involving a prospectus, roadshows to promote the offering, and a subscription period for investors to buy shares.
• After the IPO, the shares are traded on the stock exchange, and the SME becomes a publicly traded company.
• Market making is compulsory for SME IPOs for a minimum of three years, and underwriting is mandatory, with at least 15% underwritten by a merchant banker.