21/11/2023 Accounting - Finance
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.