Yes, Market Making is compulsory for 3 years post listing on SME platform.
Cost of raising funds through SME IPO ranges from 40-50 Lakhs depending on parameters like IPO size, services used etc. Sometimes it may be lower also as every IPO is different and cost varies depending on the IPO
Though, the technical requirement as per the eligibility criteria is that the company should have positive EBITDA. However, the company which has achieved a turnover level of 20 cr+ and PAT of around 1cr+ (however in case turnover is 30cr+, 3-4% PAT is feasible) of revenues has an advantage over others. A company with lower turnover or profitability cannot derive good valuations.
The company is required to have net tangible assets of Rs 3 cr as per the revised eligibility criteria of BSE SME platform.
The BRLM who has been appointed for the IPO usually raises the funds. Else the companies may arrange for investors themselves in their investor community.
The cost of underwriting varies between 3-10% depending on factors like size of IPO and other factors.
The company needs to establish a consistently growing trend in its profitability. A sudden rise in profits appears window dressed to the investors. Hence a trend needs to be established over some justified time period.
Yes, a proprietorship firm can bring the IPO on conversion to public limited company. One needs to go through the Revised Eligibility Criteria.
Yes, a partnership firm can bring the IPO on conversion to public limited company. One needs to go through the Revised Eligibility Criteria.
The firm will first be comverted in to a public limited company and that will be listed on the exchange. So, the listing happens at the Company level not the business level.
Usually SME IPO takes around 5-6 months.
Chittorgarh.com takes you through the entire IPO journey involving appointment of BRLMs, Legalities and Compliances, Due Diligence, Peer Review Audit, Appointment of Professionals and any other services that come within the scope of fundraising via IPO. The portal hand holds you for the entire IPO Journey.
Generally, for the purposes of SME IPO, the company is valued at P/E multiple.
No, the company with a track record of 3 years is eligible for raising IPO. See Revised Eligibility Criteria.
NSE and SME stock exchanges both have the SME IPO platform. The company can be listed on either of them.
Both are good SME platforms. However as per the past records it is seen that higher size IPOs are listed on NSE.
All IPO funds are credited to the company. An IPO can have two components i.e. Fresh Issue and an Offer for Sale. Fresh Issue proceeds are received by the company and offer for sale proceeds goes to investors who are making an exit from the company.
No, the funds when raised are credited to the company at the Issue price only. Any movement in the share price post listing is reflected at the Investor's end.
Market making is a facility which provides an eligible 2-way bid and ask quotes for the SME shares listed and traded on the SME exchange. Generally 1.25-1.50% of the IPO size is reserved for market making.
Mainboard IPO:
As per the eligibility criteria for IPO by SEBI, ICDR regulations do not give any threshold for either an upper limit or lower limit on the fund raise.
In the year 2024, Hyundai Motor India Limited raised Rs 27870.16 crores through mainboard IPO. In contrast in 2024, Vibhor Steel Tubes Limited raised Rs 72.17 crores through mainboard IPO.
To list on the NSE for a Mainboard IPO, a company must have ₹10 crore paid-up capital, ₹25 crore market capitalization, a 3-year track record, and comply with legal requirements, with no insolvency or debt defaults.
To list on the BSE, the company must have ₹10 crore paid-up capital, raise at least ₹10 crore in the IPO, and have a ₹25 crore market capitalization post-issue.
For more details, please refer to Link https://www.ipoplatform.com/blogs/difference-between-mainboard-and-sme-ipo/127
SME IPO
To list on NSE Emerge and BSE SME, a company’s post-issue capital should not exceed to Rs 25 crore a 3-year track record, and profit in 2 of the last 3 years. The company must have, ₹1 crore net worth, ₹3 crore net tangible assets, and at least 1 year of operating profit or a 3-year track record from its predecessor.
For details on NSE SME eligibility, refer to Link https://www.ipoplatform.com/blogs/nse-sme-eligibility-criteria/135
For details on BSE SME eligibility criteria, refer to link https://www.ipoplatform.com/blogs/bse-sme-eligibility-criteria/134
Eligibility criteria for SME IPO also does not have any threshold for either upper limit or lower limit on the fund raise.
In the year 2024, Danish power limited raise Rs 197.90 Crores through SME IPO on NSE Emerge. In contrast in 2023, Shoora Designs Limited raised Rs 2.03 crores through SME IPO on BSE SME.
For details on NSE SME eligibility, refer to Link https://www.ipoplatform.com/blogs/nse-sme-eligibility-criteria/135
For details on BSE SME eligibility criteria, refer to link https://www.ipoplatform.com/blogs/bse-sme-eligibility-criteria/134
Valuation of a company for an IPO depends on several factors, including:
IPO valuation whether its Mainboard or SME are determined on the basis of company’s performance, financial position etc.
Thus, it’s hard to say whether a Mainboard or SME IPO will get a better valuation, as it depends on above factors.
When a company raises funds through an IPO (Initial Public Offering), following things should be kept in mind;
The merchant banker must have to provide the details of utilization to SEBI.
IPO advisors or SME IPO Consultants play a crucial role in guiding the company through the IPO process. They assist with structuring the offering, preparing necessary documentation, IPO pricing with fair valuations, ensuring regulatory compliance, due diligence activity, and helping market the IPO to potential investors. Their expertise ensures a smooth and successful public listing.
IPO platform in India provides information on upcoming IPOs on NSE Emerge and BSE SME and list of merchant bankers and anchor investors. Role of IPO advisor is important in the success of the listings.
Yes, LLPs, Partnership Firms and Sole proprietorships are eligible to convert into public companies and their track record is considered for IPO eligibility. However, after converting into company there will be cooling period of one full financial year from the conversion in BSE SME and there are no such criteria for NSE Emerge.
To execute an IPO in Mainboard it takes approximately from 8 to 12 months and SME IPO it takes approximately 4 to 6 months.
Pre IPO-Issue also has to comply with SEBI ICDR regulations.
A pre-IPO company might get eventually listed on NSE Emerge, BSE SME or mainboard platform of the stock exchanges by fulfilling the NSE/BSE eligibility criteria. Best Merchant Bankers in India have the role and responsibility for launching IPO.
For further details refer this link https://www.ipoplatform.com/blogs/what-is-pre-ipo-investment-and-role-of-ipo-advisors/142
Yes, Private investors can buy shares from promoters before the IPO which is known as Pre-IPO funding also known as private placement.
For further details refer this link https://www.ipoplatform.com/blogs/private-placement-of-shares-in-pre-ipo/141
The IPO process begins with the company’s decision to go public, followed by hiring key advisors such as IPO advisors, investment bankers, legal experts, and auditors. IPO advisors assist in finalizing the Best merchant banker in India. The lead manager carries out the IPO process and files DRHP.
Top 10 Merchant Bnakers in India
Once SEBI/Stock Exchanges approves the DRHP, the company sets the price band or fixed price for shares and conducts a roadshow to generate investor interest.
Know more about DRHPs in detail.
After the IPO opens for subscription, investors can apply for shares, and the allotment will be made on the demand. Finally, the company’s shares are listed on the stock exchange, marking its entry into the public market.
In SME IPO, minimum dilution requirement is 25% to outsiders and 1.25% for market makers. However, there is no upper limit on the dilution. It is regulatory compliances for market maker to hold 1.25% of the shares to maintain the liquidity in the stocks.