It is common knowledge that SMEs form an integral part of the Indian Economy through its many operations. By employing more capital, SMEs can contribute further to the country’s GDP.

An SME IPO is said when a Small or Medium Enterprise sells its shares to the public for the first time in order to raise capital for the business. SMEs are generally traditional, conservative family-run businesses who have little to no desire to share control over their businesses with external shareholders. Hence outside investors are not inducted in the business. However, with the listing, the promoters can retain significant control over the company without much interference in day to day operations. 

Listing an SME through an IPO can cost the company anywhere from Rs. 30 lakhs to Rs. 60 lakhs, or maybe even more depending on the issue size, the companies’ capital structure and financial structure.

The SME IPO platforms are quickly gaining traction and turning into a robust funding source for start-ups. There have been over 300 listings on the BSE SME and over 180 listings on the NSE SME. These exchanges have been flexible enough to offer an easy and simple listing procedure for SMEs.

Listing companies on the SME platform have made SMEs accessible to various growth opportunities and company value addition. These listed SMEs can further grow and become eligible to be listed on the mainboard IPO platforms.

To make SME IPO listing easier, the Indian Government offers various schemes and programmes like Skill India, Make in India, Pradhan Mantri MUDRA Yojana and Public Procurement Policy which have tremendously helped agricultural and manufacturing enterprises. Further, the Tamil Nadu Government has announced assistance to SMEs for listing & raising money in the SME stock exchange with a maximum of Rs.30.00 lakhs subject to 50% of the total expenditure incurred on SME IPO.

How Can IPOs Help SMEs?

SME IPOs offer several benefits to the companies. Listing shares of a company on the BSE and NSE platforms is expected to generate a sense of respect for the company and helps in the creation of wealth. For this reason, many founders and promoters prefer to list their companies’ shares. This could help the company gain competitive advantages over its peers. It provides visibility for the business thereby generating higher credibility for the company. The funds raised by these IPOs can be used for the company’s development, expansion and diversification.

Eligibility Criteria For Listing An SME

  • The post-issue paid-up capital should at least be Rs.3 crores and not more than Rs.25 crores.
  • The company should have reported profits in at least one year in the last three years.
  • The company should have been incorporated at least two years before applying for an SME IPO

How C&B help you in SME IPO?

We help the client while he is going for SME IPO in the following manners:

  • We prepare the client’s Pitch-deck and one-pager
  • We evaluate the data and the financials and make the client understand whether is it the right time to go for listing.
  • Based on the client's profile we connect with the right Merchant bankers 
  • We once connect with merchant bankers upon their confirmation we also facilitate the due diligence.
  • We also enable the client handhold in this journey as till and post listing

Featured image: SME IPO Consultants | Consulting & Beyond

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