In the realm of Initial Public Offerings (IPOs), two prominent categories exist: Mainboard IPOs and SME IPOs, catering to the diverse needs of companies seeking public capital. Here’s a comprehensive breakdown of the distinctions between SME IPOs and Mainboard IPOs:
SME IPO vs. Mainboard IPO
1. Post-Issue Paid-Up Capital:
– SME IPO: ₹1 crore to ₹25 crore.
– Mainboard IPO: Minimum ₹10 crore.
2. Application Size:
– SME IPO: Greater than ₹1 lakh for 1 lot.
– Mainboard IPO: Ranges between ₹10,000 to ₹15,000.
3. IPO Underwriting:
– SME IPO: Mandatory (100% underwritten with Merchant Banker underwriting 15%).
– Mainboard IPO: Not mandatory (Under 50% compulsory subscription to Qualified Institutional Buyers – QIBs).
4. Document Vetting:
– SME IPO: Stock exchange vets the offer document.
– Mainboard IPO: SEBI vets the offer document.
5. IPO Time Frame:
– SME IPO: 3-4 months.
– Mainboard IPO: 6 months.
6. Share Selling:
– SME IPO: Can’t sell shares individually; the entire lot must be sold.
– Mainboard IPO: Can sell shares individually on the secondary market.
7. Reporting Requirements:
– SME IPO: Companies need to half-yearly report mandatorily.
– Mainboard IPO: Companies need to provide quarterly reports mandatorily.
8. Minimum Allottees:
– SME IPO: Minimum 50 allottees.
– Mainboard IPO: Minimum 1000 allottees.
Understanding these differentiating factors is crucial for companies contemplating an IPO, as it guides them in choosing the most suitable avenue based on their size, capital requirements, and compliance capabilities. Whether navigating the SME platform or opting for a Mainboard listing, companies can align their IPO strategy with these distinctive features to achieve their fundraising and growth objectives.