SME IPO - Full Form, Eligibility, Listing Process & How to Apply

SME IPOs are a way to get listed in Stock Exchanges like NSE Emerge and BSE SME in the secondary market. These IPOs are similar to Mainboard IPOs, but they have some differences in terms of investment size, listing, and exchanges. In this article, we will explore how SME IPOs work and how to apply and check allotment.

SME IPO Full Form

SME IPO stands for “SMALL AND MEDIUM ENTERPRISES Initial Public Offering”. These IPOs are only for the companies that come under the “Small” and “Medium” Enterprise categories. 

What is SME IPO?

SME IPO is a type of IPO that comes under the Small and Medium Enterprises category as per the SEBI classification of IPOs. These companies are very small companies whose overall IPO size is less than 100 Cr. The companies raise funds to expand their network and operations, repaying debt, and sometimes to grab the attention and brand recognition in public via IPO.

SME IPO are listed in separately in the exchange in NSE & BSE. For NSE, it will list on its NSE EMERGE platform and BSE SME.

Current SME IPOs

Here is the list of recent and upcoming SEM IPOs along with their issue Opening date and the closing date.

SME IPO Listing Process

The SME listing process is the same as the Mainboard IPO listing process; there is no difference between them. Let's break down the step-by-step process below.

Step 1: The Company board of directors need to appear for a board meeting and approve the IPO.

Step 2: The company should appoint the underwriters for the IPO, such as investment banks, the registrar, and the book-running manager.

Step 3: Prepare and submit the Draft to the SEBI.

Step 4: Wait for the SEBI approval and clearance.

Step 5: After getting the approval from SEBI, advertise the IPO.

Step 6: Launch the IPO and allot the shares to the investors.

Step 7: Trade the shares once they get listed.

SME IPO Eligibility

For SME IPOs, getting listed on any of the exchanges has some regulatory requirements, as mentioned below.

1. The company (SME) should be registered under the Companies Act 1956.
2. The company has a net tangible assets of 1.5 Crore.
3. The company should have been operational for the past 3 years.
4. The promoters shouldn't exit the company before the 1 year of post-listing.
5. The post issue paid-up capital of the company shouldn't exceed 25 Crores.
6. The financial statements should be positive in EBITDA over the past 2 years.

Companies Benefit from SME IPO

The companies benefit via the IPO in the following ways.

Capital Requirement:

• The SME organisation will get the capital from the public for their operations, growth, repayment of debt and research and development.

Increasing Brand Value:

• Companies sometimes use IPOS to enhance visibility and credibility and increase their organisation's brand value by spreading their name to all investors, showcasing their business model and past performance, and creating brand value.

Exit of Early Investors:

• SME IPOs offer their promoters an early opportunity to exit from the company by diversifying their portion into the public through the OFS option in the IPO. 

SME IPO Allotment Status

All the SME IPOs have some regulatory conditions from SEBI that the IPO allotment status is to be announced within 24 working hours from the closing of the IPO.

How to check SME IPO allotment status?

The IPO allotment Status can be checked from the official websites of the registrars (Kfin Tech, Linkin Time, Maashitla Securities) or alternatively, you can check on the Exchange website where the IPO is being listed. Once the IPO closes, you can check its allotment status on the exchange websites by using your application number, your PAN card number, or DP ID by following the simple steps below,

Step 1: Open the NSE (or) BSE (or) Registrar website in your browser.

Step 2: Head to the IPO allotment section.

Step 3: Select the IPO from the drop-down menu.

Step 4: Verify the entered details.

Step 5: Enter the Captcha and click on the submit button.

Once you click on the submit button, your allotment details will appear, and if you see any number in the shares allotted, it means you have been allotted that many shares; if it is “0”, it means you have no shares allotted.

How to Apply for SME IPO?

Investors can apply for any of the SME IPOs through the following methods: ASBA, UPI, & OFFLINE.

ASBA: 

ASBA (Application Supported by Blocked Amount) is a method to apply for IPOs by using your bank’s net banking platform. Here are the steps to apply for IPO using ASBA

Step 1: Log in to your “Net Banking Portal” with your registered bank account or demat account.

Step 2: Head to the “IPO” section in your net banking portal.

Step 3: Select the required “IPO” from the “Drop-down” menu.

Step 4: Fill in the “Bid Details” like “Lot Size” & Price.

Now your application is successful, you can track the application using the application number.

UPI: 

Applying for IPO via UPI is a very simple process, and it is used by most of the retail investors by subscribing for IPO directly from their registered stockbroker. Follow the easy process mentioned below to apply for IPOs via UPI

Step 1: Log in to your “Stockbroker” app or website.

Step 2: Head to the IPO column.

Step 3: Select the IPO from the available list.

Step 4: Fill the “Bidding Details” like “Price & Quantity”.

Step 5: Enter your “UPI ID” of the registered bank.

Step 6: Go to the UPI aggregator app and complete the UPI mandate.

Hence, your process of applying for the IPO is completed using UPI. Wait for allotment results to check the Allotment status of your bid.

Offline: 

Applying IPOs in the Offline Method is an old process where investors used this before exchanges adopted the online trading mechanism, even though you can apply IPOs in offline by following the below mentioned steps.

Step 1: Download the IPO application form from the “Exchange” or “Stockbroker” website.

Step 2: Fill in the required details like “Personal information” & “Bidding Details” for the IPO.

Step 3: Fill the Bank Details for blocking of the funds.

Step 4: Submit your “Application to your stockbroker” and sit back, relax, your broker will take care of the remaining process.

Hence after submitting the application your application process will be completed wait for getting the Application number from your stock broker to track your application status and allotment. 

Difference Between IPO and SME IPO

Conclusion

SME IPOs are the IPOs of small-cap companies. These are helpful for investors who are looking to invest in small companies rather than large-cap companies. These IPOs are not only for raising capital, they come for growth, stability, and the support of the public (retail investors). Analyse the company thoroughly and apply for the IPOs carefully by understanding all the risks.

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2. How to Apply for an IPO?
3. What is Grey Market Premium (GMP) in IPO?
4. What is Pre IPO and How to Buy Pre IPO Shares?
5. What is FPO in Stock Market? - Full Form, Meaning, How to Apply
6. Types of IPO: Fresh Issue, OFS, Fixed Price and Book Building