Upcoming SME IPO
"An IPO is the beginning of a new chapter in a companys journey.".
Small and Medium Enterprise IPO
Small and Medium Enterprise Initial Public Offering (SME IPO) has evolved as an efficient channel through which small businesses can access capital in the stock markets and use it to finance their expansion. At IPO Ji, we present to you a detailed guide about all that you should know about SME IPO listing in India, its eligibility, advantages, step-by-step procedure, and factors to consider.
What is SME IPO?
SME IPO is a special kind of Initial Public Offering applicable to the Indian Small and Medium Enterprises. As compared to large-cap IPO, SME IPO enables smaller companies to tap into public finance on the stock exchange but under relaxed regulatory standards.
SME Exchange Platforms
The shares of the SME after a successful listing are then traded on specialised platforms. This enables retail investors, institutional investors and high-net-worth individuals (HNIs) to become shareholders and be part of the growth story of the SME.
NSE SME Exchange
NSE Emerge platform specifically designed for small and medium enterprises
BSE SME Exchange
BSE SME platform for emerging small and medium businesses
What Reasons Do SMEs Have to Choose IPO?
The small businesses might opt to become publicly traded through an SME IPO in India for several strategic reasons:
Capital Raising
Fund business growth, working capital needs, and pay down existing debt
Brand Exposure
Increase brand visibility and credibility in the market
New Partnerships
Find new partners and investors to support business growth
Liquidity
Make available liquidity to current stockholders
Eligibility Criteria - SME IPO
Not all small businesses are eligible to apply for SME IPO listing. There are certain eligibility standards that SEBI and stock exchanges prescribe to the company. The important SME IPO eligibility criteria are as under:
Should be incorporated under companies act, 1956 or 2013
The paid-up capital after the issue must not be more than 25 Crore
Net tangible assets of not less than 1.5 Crore
3 years minimum operational track record for firms converting from partnership/proprietorship/LLP
The firm should possess a fully operational website
No change in promoters, at least one year prior to filing
Demat form agreement to trade securities
Agreement with Depositories (NSDL/CDSL) on contractual basis
The SME has to adhere to SME IPO guidelines of SEBI
SME IPO Process in India
Here's a step-by-step overview of the SME IPO process:
Appoint a Merchant Banker (Lead Manager)
The SME must appoint an SEBI-registered merchant banker, also known as an underwriter, to manage the IPO. The merchant banker conducts due diligence, prepares documents, and guides the company through the entire listing process.
Draft Red Herring Prospectus (DRHP)
The merchant banker prepares the Draft Red Herring Prospectus (DRHP), containing detailed financials, business model, risk factors, and future plans, allowing potential investors to assess the company.
Submit DRHP to Stock Exchange
Unlike mainboard IPOs submitted to SEBI, SME IPO DRHP is submitted directly to the relevant stock exchange (BSE SME or NSE Emerge) for approval.
Approval and IPO Launch Date
Upon approval, the IPO opening date, issue price, lot size, and other important details are finalized.
Marketing and Promotion
The company, along with the lead manager, markets the IPO to potential investors through roadshows, digital campaigns, and advertisements to generate interest.
IPO Launch and Subscription
Investors can subscribe to the IPO by applying for a minimum lot size, as specified in the issue. Subscriptions are open for a few days.
Allotment and Listing
Once the subscription period closes, shares are allotted to successful applicants. Post-allotment, the company gets listed, and shares begin trading on the SME platform of the stock exchange.
Latest SME IPO Listings in India
Stay updated with IPO Ji for the latest information on:
Upcoming SME IPOs
Latest announcements and schedules
Live Subscriptions
Current subscription status
Allotment Status
Check your application status
Price Bands
Issue price ranges
Grey Market Premium
Latest GMP trends
FAQs
Ans. Upcoming SME IPOs are those which are expected to open for subscription in the next couple of weeks or months.
Ans. Investing in an SME IPO can be a bit risky due to the high amount of funds required to bid. However, based on data from previous financial years, these IPOs have the potential for significant gains or losses depending on the company's fundamentals.
Ans. The main criteria for SME IPO listing are:
- Minimum track record of 3 years.
- Positive cash accruals from operations for at least 3 years.
- Positive net worth.
Ans. Yes, you can apply for an SME IPO. This issue is open to NII (Non-Institutional Investors), retail, and sometimes QIB (Qualified Institutional Buyers) investors. Applications can be made through ASBA (Application Supported by Blocked Amount), UPI-based applications, or via forms provided to your bank or broker.
Ans. You can sell SME IPO shares just like any other IPO shares through your DEMAT/Trading account or by contacting your broker.
Ans. There are four ways to subscribe to an SME IPO:
- IPO Ji App/Website – Online: IPO Ji provides an excellent interface to apply for SME IPOs through multiple Demat accounts in one go. You can check the details in our blog "How to Apply for an IPO using IPO Ji App/Website." You can use your existing Demat accounts, link them to the IPO Ji App/Website (only needs to be done once), select the IPO you wish to apply for, choose the respective added accounts, select the bid quantity, and press apply.
- UPI – Online: Log into your Demat Account, select the IPO, and apply using your UPI ID. Accept the payment mandate received on your bank app/Google Pay to complete the application.
- ASBA – Online: Log into your bank account and apply through ASBA. Fill in your Demat Account Number, PAN Number, bidding details, and submit the form.
- Broker – Offline: Obtain the application form from the broker, have it filled out by them, and submit it on your behalf.
