What is an SME IPO and How to Apply for an SME IPO?
India’s growth story is incomplete without small and medium enterprises (SMEs) SME IPO. Despite SMEs' crucial role, they have to struggle for funds daily. Solving this, SME IPO offers promising investment opportunities for investors and is becoming increasingly popular due to its potential for growth and expansion.
Published on 11 July 2023
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This blog aims to comprehensively understand SME IPO and guide potential investors in applying for them.
What is an SME IPO?
SME IPO refers to the process by which small and medium-sized companies offer their shares to the public for the first time to raise funds for business. Companies can raise the fund for business expansion, debt repayment, etc. Unlike regular IPOs of large companies, SME IPO is designed explicitly for smaller entities seeking to access the capital market. These IPOs provide an opportunity for investors to participate in the growth story of promising SMEs, and in return, SMEs gain access to a broader base of capital.
SME IPO Criteria
Before diving into the application process, let's understand the SME IPO criteria a company must meet to launch an SME IPO. The key criteria include
Track Record
The company must have a profitable track record for at least three years. This criterion ensures that the company has sound management with stable financial performance and is well-positioned to meet the publicly traded entity's obligations.
Net Worth
The minimum net worth of the company should be above a specified threshold, usually set by the stock exchange where the SME intends to list.
Size
The company's post-issue paid-up capital (including the promoter's contribution) should not exceed a certain limit typically set by the exchange.
Promoters' Contribution
Promoters must hold a minimum percentage of the company's post-issue capital, ensuring their commitment to the business's success even after going public.
SME IPO Minimum Investment
SME IPO minimum investment depends on the company's offer price per share. Investors must purchase a minimum quantity of securities, which generally vary from one IPO to another. The minimum investment amount is around rupees 1,00,000, making it an attractive option for retail investors to participate in IPOs and potentially benefit from capital appreciation in the future.
How to Apply for an SME IPO?
Let's understand the step-by-step process of investing in an SME IPO.
Step 1: Choose a Reliable Stockbroker
To apply for an SME IPO, you'll need to do so through a registered stockbroker. Choose a reliable and trustworthy stockbroker with a good track record of handling IPO applications. The stockbroker must be registered with the stock exchanges and the Securities and Exchange Board of India (SEBI).
Step 2: Open a Demat Account
Open a Demat account if you don’t have one. A Demat account is essential for holding and trading securities in electronic form. Submit the required documents and complete the KYC to open your Demat account.
Step 3: Funding Your Trading Account
Before applying for an SME IPO, ensure you have sufficient funds in your trading account. The application amount will be blocked in your account until the IPO allotment process is completed.
Step 4: Check IPO Details
Monitor the stock exchange's website or financial newspapers for SME IPO announcements. Once the SME IPO you are interested in opens for subscription, check the prospectus (offer document) to understand the company's business, financials, and other relevant details.
Step 5: Fill out the IPO Application Form
Obtain the IPO application form from your stockbroker or download it from their online portal. Fill in the necessary details accurately, such as your name, PAN (Permanent Account Number), Demat account details, bid price, and the number of shares you want to apply for.
Step 6: Submit the Application
After completing the application form, submit it to your stockbroker before the IPO subscription period ends. You can apply for an SME IPO online or offline, depending on your broker's facilities.
Step 7: Application Payment
You can make payments through Internet banking or Unified Payments Interface (UPI) for online applications. Submit a check or demand draft along with the application form for offline applications.
Step 8: IPO Allotment
The company reviews the applications once the IPO subscription period closes and allocates shares based on demand. If oversubscribed, shares will be allocated pro-rata, and the refund will be credited to your account.
Step 9: Listing and Trading
After the allotment, the shares will be credited to your Demat account. The SME IPO shares are generally listed on the stock exchange within a few days after the allotment. You can start trading the allotted shares on the stock exchange.
Final Words!
SME IPO presents an exciting opportunity for small and medium-sized companies seeking capital and investors looking for growth prospects. Understanding the eligibility criteria, minimum investment, and the application process is crucial for investors to make informed decisions. By following the step-by-step guide on how to apply for an SME IPO, investors can participate in these offerings and potentially benefit from the growth of promising SMEs. Before investing, it is advised to get expert advice and select the right security that matches your financial goal and risk appetite. Happy investing!
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IPO, or an Initial Public Offering, is the first time a company issues stocks for the purchase of the common public. Investors can then make gains on these stocks that may appreciate over the course of time. While there are many benefits of investing in an IPO, there are many risks associated with it as well. Therefore, before you invest in an IPO, you must understand the benefits of the IPO to investors.
IPOs have become extremely popular these days, with many companies going public during the year. Many companies recorded record-breaking subscriptions. Many IT companies, BFSI companies, food and beverage companies, etc., captured the limelight when it came to IPO. Thus, IPOs have gained momentum in recent years and seem like they will continue to do so.
Initial Public Offering, also known as IPO, is the first time when a private company offers shares to the public. In this process, the ownership gets transferred- from being entirely privately held, the ownership of the company is given to the public.
IPO, or an Initial Public Offering, is the first time a company issues stocks for the purchase of the common public. Investors can then make gains on these stocks that may appreciate over the course of time. While there are many benefits of investing in an IPO, there are many risks associated with it as well. Therefore, before you invest in an IPO, you must understand the benefits of the IPO to investors.
IPOs have become extremely popular these days, with many companies going public during the year. Many companies recorded record-breaking subscriptions. Many IT companies, BFSI companies, food and beverage companies, etc., captured the limelight when it came to IPO. Thus, IPOs have gained momentum in recent years and seem like they will continue to do so.
Initial Public Offering, also known as IPO, is the first time when a private company offers shares to the public. In this process, the ownership gets transferred- from being entirely privately held, the ownership of the company is given to the public.
Sharekhan Comtrade Private Limited (TM) operates the web site accessible from the URL www.myespresso.com (the “web site”').
Sharekhan Comtrade Private Limited is committed to protecting your privacy and utilising technology that gives you the most powerful, safe, online experience that you can get anywhere else.
Sharekhan Comtrade Private Limited does, however, gather certain information that is provided by you to the Web Site. Sharekhan Comtrade Private Limited believes that by collecting this information Sharekhan Comtrade Private Limited is able to provide you with a personalised web experience, and to assist its own sales team and advertisers in efficiently reaching an appropriate audience.Sharekhan Comtrade Private Limited does, however, gather certain information that is provided by you to the Web Site. Sharekhan Comtrade Private Limited believes that by collecting this information Sharekhan Comtrade Private Limited is able to provide you with a personalised web experience, and to assist its own sales team and advertisers in efficiently reaching an appropriate audience.
Sharekhan Comtrade Private Limited requests the minimum information it believes necessary to achieve this goal.
The following discloses Sharekhan Comtrade Private Limited's information gathering and dissemination practices for the Web Site:
System Data:
Sharekhan Comtrade Private Limited uses your IP address to help diagnose problems with our server and to administer the web site. Your IP address is used to identify you and your shopping cart and to gather broad demographic information.
Registration Data:
The Web Site's registration form may require users to give us contact information (like their name, phone number and e-mail address), unique identifiers (like their PAN Number) and demographic information (like their pin code, age or income level). The Web Site uses customer contact information from the registration form to send the users information about Sharekhan Comtrade Private Limited and promotional material from some of Sharekhan Comtrade Private Limited's partners. The customer's contact information is also used to contact the visitor when necessary. Unique identifiers (such as PAN numbers) are collected to verify the user's identity. Demographic and profile data is also collected at the Web Site. We use this data to tailor the visitor's experience at the Web Site, showing them contents that we think they might be interested in, and displaying the contents according to their preferences. This information is shared with advertisers on an aggregate basis.
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This site contains links to other Web Sites which are not necessarily been screened or reviewed by www.myespresso.com. Sharekhan Comtrade Private Limited is neither responsible for the privacy practices or the contents of such Web Sites nor shall be held answerable for the inaccurate, inappropriate or offensive data, material, information, products and services that may be viewed on those sites.
Sharekhan Comtrade Private Limited may operate a number of co-branded sites. Policies regarding information collection and sharing may differ on some of these co-branded sites. If you have any particular questions, you should check the privacy statement that appears on each co-branded site.
Order Forms:
The Web Site uses an order form for customers to request information, products and services. The Web Site collects visitors' contact information (like their mobile number or e-mail address), unique identifiers (like their PAN number) financial information (like their account or credit card numbers) and demographic information (like their pin code, age or income level). Contact information from the order form is used to send orders, information about Sharekhan Comtrade Private Limited, and promotional material from some of Sharekhan Comtrade Private Limited's partners to the visitors of the Web Site. The visitor's contact information is also used to get in touch with the visitor when necessary. Financial information that is collected is used to check the users' qualifications and bill the user for products and services. Unique identifiers (such as PAN numbers) are collected from Web Site visitors to verify the user's identity.
Surveys and Contests:
The Web Site's online surveys ask visitors for contact information (like their mobile number or e-mail address) and demographic information (like their pin code, gender, age or income level). The Web Site uses contact data from its surveys to send the user information about Sharekhan Comtrade Private Limited and promotional material from some of Sharekhan Ltd.'s partners. The customer's contact information is also used to contact the visitor when necessary. Users may opt-out of receiving future mailings; see the choice/opt-out section below. Demographic and profile data is also collected at the Web Site. The Web Site use this data to tailor its visitor's experience at the Web Site, showing them content that it thinks they might be interested in, and displaying the content according to their preferences. This information is shared with advertisers on an aggregate basis.
Sharekhan Comtrade Private Ltd run contests on the Web Site in which we ask visitors for contact information (like their e-mail address). Sharekhan Comtrade Private Limited uses contact data from its contests to send users information about Sharekhan Comtrade Private Ltd. and promotional material from some of our partners. The customer's contact information is also used to contact the visitor when necessary. Users may opt-out of receiving future mailings; see the choice/opt-out section below.
Third-Party Advertisement Servers:
Sharekhan Comtrade Private Limited engages the services of an outside advertisement company to display advertisement on the Web Site. These advertisements may contain cookies. While Sharekhan Comtrade Private Limited uses cookies in other parts of the Web Site, cookies received with banner advertisements are collected by the Advertisement company, and Sharekhan Comtrade Private Limited does not have access to this information.
Protection of your Data and Information:
The privacy and protection of your data and information provided to us is of vital importance. Sharekhan Comtrade Private Limited shall ensure to safeguard the security and confidentiality of any information you share with us. Any personally identifiable information of the customers obtained by us shall not be used or shared other than for the purposes to which the customers consents. However security and confidentiality of information cannot be guaranteed cent percent. Hence despite our utmost efforts to protect your personal information, Sharekhan Comtrade Private Limited and www.myespresso.com cannot warrant the security of any information you transmit to us through our online services. Such transmission of your personal information is done at your own risk.
Disclosure of Customer Information :
Sharekhan Comtrade Private Limited and www.myespresso.com shall not deliberately disclose customer's personally identifiable information to any unauthorized third person, save and except where such information shall be disclosed in good faith and for the purpose of law for the time being in force or to protect the rights and property of Sharekhan Comtrade Private Limited and www.myespresso.com.
Public Forums :
The Web Sites makes chat rooms, forums, message boards and/or news groups available to its users. Please remember that any information that is disclosed in these areas becomes public information and you should exercise caution when deciding to disclose your personal information.
Supplemental Information :
The Web Site supplements the information that you provide with information that is received from third parties.
The Web Site DOES NOT entice by the prospect of a special game, prize or other activity, to divulge more information than is needed to participate in the activity.
Further to the above, in light of the recently notified Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011. (Hereinafter referred to as the Rules)
The following shall be deemed to be sensitive information :
Password;
Financial information such as Bank account or credit card or debit card or other payment instrument details;
Physical, physiological and mental health condition;
Sexual orientation;
Medical records and history;
Biometric information;
Any detail relating to the above clauses as provided to body corporate for providing service; and
Any of the information received under above clauses by body corporate for processing, stored or processed under lawful contract or otherwise:
provided that, any information that is freely available or accessible in public domain or furnished under the Right to Information Act, 2005 or any other law for the time being in force shall not be regarded as sensitive personal data or information for the purposes of Rules.
Collection of Information:
Compliance with KYC guidelines as per SEBI / Exchanges / Or any other Act, law or regulation requiring the same and any internal KYC guidelines formulated by Sharekhan Comtrade Private Limited.
In order to provide enhanced trading experience to the client.
In order to provide any further information to be provided to regulators.
Such information may be collected in a manner that the client is always aware of the collection and purported usage of the same. The client shall have an option to withdraw consent to share the information. However such intimation shall be required in writing. Such intimation shall only be taken into account from the date on which the same is received. Sharekhan Comtrade Private Limited may choose to stop services to such a client in case such intimation is received. Such information shall only be used for the purpose it is collected.
Clients would be allowed an option not to disclose any information to be collected, provided the same is in compliance with regulatory requirements.
Disclosure of information:
Disclosure of sensitive information would be as per the terms agreed by the clients. For any change in such terms, the clients would be informed.
Provided no consent may be required in case the same is being shared as per compliance guidelines or as required by regulators.
Any information being disclosed to third parties would be in accordance with the Rules and would be done provided such third party has the same level of compliance guidelines as Sharekhan Comtrade Private Limited.
Sharekhan Comtrade Private Limited shall allow clients to review their personal information and the same shall be allowed to be edited provided exchange guidelines relevant to the same are followed.
Sharekhan Comtrade Private Limited shall maintain reasonable security practices and procedures and maintain a comprehensive documented information security programme. In the event of an information security breach, Sharekhan Comtrade Private Limited or a person on its behalf shall be required to demonstrate as and when called upon to do so by the agency mandated under the law, that there have implemented security control measures as per their documented information security programme and information security policies and information security policies that contain managerial, technical, operational and physical security control measures that are commensurate with the information assets being protected with the nature of business.
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Download Client Registration Documents (Rights & Obligations, Risk Disclosure Document, Do's & Don't's) in Vernacular Language :
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