What is SME?
SME Listing exchange is a stock exchange platform dedicated for trading the shares of small and medium scale enterprises (SMEs) who, otherwise, find it difficult for themselves to get listed in the main exchanges. The SME IPO listing platform of the Exchange shall be open for those SMEs whose post issue paid-up capital shall be less than or equal to Rs.25 cores.
What is the idea behind SME IPO?
Although SME contribute a large portion to Indian Economy like 40% of the workforce in India, 45% of manufacturing output etc. Yet previously, SMEs used to demand only on Banks and Financial Institutes for capital requirement that too subjected to various loan constraints.
But since 2012, BSE and NSE have launched SME platforms where they could raise funds from the capital markets. Also, after few years the company can get their share transferred from SME platform to the Main Board.
What all you Get
Funds Raising & Cas Flow
Wealth & value Creation
Image, Branding, & Trust
Shares Becomes Currency/money
Business Model Expansion
Multiply Sales, Profits, Cash
Lower Debt Burden
ESOPs/Autopilot
Multiply Profits Growth
Unicorn Company
SME IPO Listing – Funding option for SME
In recent years, SMEs have got an opportunity to raise funds by getting it listed on the SME stock exchange in a similar manner as small, mid-cap, and blue-chip companies are listed on the mainboard. This is called as SME Listing IPO
This is a dedicated platform for SMEs and after few years of getting listed on this platform and fulfilling other conditions, the listed SME can switch to the mainboard.
What is the SME stock exchange?
It is a dedicated stock exchange and trading platform for SMEs only.
In India an SME exchange functions within a recognized stock exchange or the main exchange such as the BSE Limited and the National Stock Exchange of India.
The name of the exchange for SME in BSE is BSE-SME exchange. The name of the NSE exchange for SMEs is EMERGE.
SME Listing Benefits for Eligible Business
Making a public issue of securities and listing on stock exchanges is a dream of every entrepreneur. Listing on stock exchanges provides a lot of benefits to business such as increased visibility, favourable treatment of capital gains taxes, valuation benchmarking, strengthening of governance and internal controls etc.
- Easier to list. Minimum allottee required is only 50 – can be achieved with focused marketing. Lower cost, time and effort to get listed.
- It helps to raise capital.
- 100% underwriting of the issue will ensure that the issue is fully subscribed.
- It helps in wealth creation and valuation of business.
- National and international credibility, branding and visibility.
- Capital gain tax benefits on listed shares as compared to unlisted shares.
- Instead of giving Fat salaries, you can give ESOPs to employees. Helps in talent retention.
- Increases net worth.
- Leveraging ratio gets more attractive and capacity to raise debt increases.
- Enhance visibility and credibility.
- Widens capital base and increases working capital.
- Alternate Valuation- Potential based valuations could be offered by informed investors rather than benchmarking with matured large Corporates on the mainboard.