SME IPO: Grow Your Business with Public Investment
If you’re a small or medium-sized business looking for funds, an SME IPO (Initial Public Offering) can be a right choice. Going public allows you to attract new investors, get money for growth, and strong your brand value in the market.
What is an SME IPO?
An SME IPO allows small and medium-sized companies to offer shares to the public and list on platforms like BSE SME or NSE Emerge. It’s a regulated and strategic route for businesses seeking growth funding, improved transparency, and higher visibility.
Why Consider SME IPO?
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For Business Owners
- Access to Capital – Get funds to expand operations, reduce debt, or invest in new businesses.
- Stronger Brand Image – When listed in IPO enhance trust and visibility to your business.
- Shareholder Liquidity –Get new buyers, business partners, and people who are interested in supporting the company.
- Wider Reach – Get new buyers, business partners, and people who are interested in supporting the company.
For Investors
- New Investment Channels – Focusing on growing businesses that have long-term potential.
- High Returns – Investing in small businesses early can help you get better returns as they grow.
- Diversified Portfolio – Putting your money in different places, and this adds one more option to help reduce risk and grow your money.
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Eligibility Criteria for SME IPO in India
To apply for listing on an SME platform, companies must meet these conditions:
Registered Entity: Incorporated under the Companies Act, 1956/2013.
- Financial Strength:
1. Tangible assets of ₹3 crores or more.
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2. Positive net worth in latest 2 years out of the last 3 years.
3. Profits of ₹1 crore or more in latest 2 of the past 3 years.
- Post-IPO Capital: Should be below ₹25 crores.
- Mandatory Demat Account: Must have agreements with NSDL or CDSL.
- Corporate Website: A functional business website is compulsory.
- Compliance Track Record: No major regulatory violations in recent years.
Step-by-Step SME IPO Process
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- Appoint a Merchant Banker – Select a SEBI-approved lead manager for IPO execution.
- Financial & Legal Due Diligence – Auditing of financials, compliance, and legal records.
- Drafting Offer Document – Create the Draft Prospectus and submit it to the stock exchange.
- Exchange Approval – Get clearance and schedule the IPO launch.
- Marketing & Roadshows – Promote the IPO to potential investors.
- Public Issue & Allotment – Open IPO for subscription and allocate shares.
- Stock Listing – Complete the listing process on BSE SME or NSE Emerge.
On average, this process takes 90 to 120 days depending on business readiness.
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Important Guidelines You Must Know
- Market Maker is Mandatory: Ensures liquidity post listing.
- Issue Underwriting: The proposed issue must be underwritten for a reasonable amount, which is expected to be doubtful while open for subscription.
- Minimum Application Size: Retail investors usually need to apply for ₹1,00,000 or more.
- Promoter Holding Lock-in: Minimum 20% promoter contribution with a lock-in period of 3 years.
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Why Launch an SME IPO with NKB Kredit?
- End-to-End IPO Support – From planning to listing, our experienced team will ensure the right resources for successful execution of the issue.
- Transparency & Compliance Assurance.
- Tailored Financial Solutions for Growing Businesses.
Common SME IPO Options Available
- Fresh Issue of Shares—Raise new capital for business operations.
- Offer for Sale (OFS)—Allow existing shareholders to sell part of their stake.
- Hybrid Model—Combine both fresh issue and OFS.
General FAQs – SME IPO
What is SME IPO ?
SME IPO is a mechanism to raise funds by enlarging the business stakeholders whereby promoters are able to reduce their risk by making investors as participant of their growth story with or without loosing management control of the business
What is the cost of Listing a SME entity through SME IPO ?
The cost of listing comprises various aspects like fee charged by lead manager, legal advisor, registrar, relevant stock exchange’s fee, depositories fee etc. These are dependent on the quantum of funds desired to raise from SME IPO route.
What are the requirement to list on SME exchange ?
Any entity desiring to list its business at SME Exchange should be profitable & should have completed at least 3 years of operation to fairly visualize the execution capabilities of promoters. There is upper limit on fund raising through SME Exchanges & after crossing the specified threshold, it need to be listed on normal exchanges. Besides this the entity should have +ve networth.
Is there anything need to be paid annually after listing ?
Yes. There are annual maintenance charges payable to registrar, depositories & exchanges which depend upon the capital base listed on the exchange.