What is SME IPO?
An SME is a small business unit, which is the driving force for economic growth, same like another large economy, India too has a fair share of SMEs which constitute a bulk of the industrial base,
and also contribute significantly to exports and GDP of India.
Now a day, SMEs in India operate in sectors ranging from the traditional to modern, competing with the best globally.
SMEs in new sectors in the prevailing economy like IT, retailing, education, ITES, media, and the like represent the new and modern face of India.
SME stands for Small and Medium Enterprise. Therefore, naturally, when Small and Medium Enterprise comes up with its IPO(Initial Public Offering), they are called SME IPO.
The size of the IPO is very small. The size of the company coming with it is IPO is also small.
These IPOs are very subjective in nature and on top of that, you generally don’t get a chance to liquidate your amount.
And minimum investment needed in IPO’s is 1+ Lakh – which is again a hindrance for small investors.
As per some expert advice – if you are really a long-term investor and really have conviction over the IPO, after doing extensive research then SME IPO can be Gems.
On the other end, major organizations that come with their IPO are regular or mainstream IPOs. The size of the IPO is huge.
There is always risk in applying any IPO, either SME or mainstream. However, SME IPOs are a little riskier.
One has to understand the company, its operations, its financials, etc very carefully before applying.
Let’s take a look at the differences between an SME IPO and a Regular IPO
Small and Medium Enterprise IPO Vs Regular IPO
|Factors||SME IPO||Regular IPO|
|Post-issue paid-up capital||Minimum post-issue capital of Rs 1 Cr and maximum Rs. 25 Cr.||Minimum post issue paid up capital of Rs. 10 Cr.|
|Minimum Allotees in IPO||50 (Minimum number of allotees)||1000|
|IPO Underwriting||Mandatory (100% underwritten with Merchant Banker underwriting 15%)||Non-Mandatory (Under 50% compulsory subscription to QIB’s)|
|Offer Document Vetting||By Stock Exchange||By SEBI|
|Application Size||Rs. 1,00,000/-||Rs. 10,000 – Rs 15,000/-|
|Timeframe||3 to 4 months||6 months onwards|
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Lot Size in IPO
Book Built Issue IPO – Process | Steps | Types | Pros & Cons
Price Band in IPO
Undersubscribed IPO – What Happens if the IPO is Undersubscribed?
When Can I Sell IPO Shares? Can I Buy & Sell an IPO in the Same Day?
IPO Applying Time
How Many Lots Can We Buy in IPO to increase the chances of an allotment?
Oversubscribed IPO: What happens if the IPO is oversubscribed?
SMEs IPO Form
You can download the current SME IPO application form from following a path.
How to Invest in SME IPO via Online or Offline?
Time needed: 5 minutes.
Follow the steps given below for apply SME IPO through offline
- Bank branch
Visit the nearest designated Bank branch to apply for an SME IPO via ASBA service. It is not essential to hold an a/c in the same branch, the a/c can be with any Bank branch.
- ASBA Application Forms
ASBA bid-cum application forms are available for download and printing, from websites of the Stock Exchanges.
Kindly find below the links to apply for the same:
Click here to download the form(BSE SME)
Click here to download the form(NSE)
- Submit the Form
Bank account number, PIN, etc. need to be filled in the form of the SME IPO and submitted to the branch.
- Block the Money
Later, the designated bank will block the money in the specified Bank account for the applied IPO and send the application information to the designated stock exchange for that IPO.
The investor shall be responsible
1. for maintaining sufficient funds equivalent to the application amount in his/her account.
2. for furnishing correct and accurate details in the ASBA application form of the IPO.
- Insufficient Amount or any Discrepancy in the Application Form
The bank shall reject the IPO application and shall not be able to send the bid to the stock exchange.
- For Any Inquiry
The application number, mentioned on the acknowledgment slip handed over at the time of the application, needs to be provided.
An investor can trade on BSE or NSE SME emerge platform depending upon where it is listed.
All stocks listed on BSE SME or NSE Emerge can be traded directly on any of the trading platforms provided by the Zerodha Kite App.
On NSE, stocks listed in EMERGE are available in the ‘SM’ category. On BSE, stocks listed in SME are available in the ‘M’ category.