SME IPO
Small and medium-sized enterprises (SMEs) are considered the pillars of Indian economy. As per 2021 data, SMEs contribute nearly 27% to India’s GDP by generating employment and contribution to exports. Statistically SMEs in India employ nearly 40% of India’s workforce and contribute 45% to India’s manufacturing output and 40% to India’s total exports. India is powered by the silent revolution happening in the SMEs space. Nearly with 48 million SMEs, India is ranked at number two in the world, just after China with 50 million SMEs.
SMEs are key to the US$ 5 trillion Indian economy but one the significant constraints that SMEs face is, limited access to finance and lack of funds is the main reason for SMEs to go out of business.
In the recent past, the SMEs were not able to access the Capital Markets through Stock Exchanges due to several factors, such as stringent regulatory, financial and compliance disclosure requirements.
To help the SMEs to have an easy access to Capital Markets, without much regulatory requirements, SME Exchange was launched by BSE and NSE. Getting listed on SME Stock Exchanges, the SMEs can access to Capital Markets easily, quickly and at lesser cost.
Do you want to get Listed?
Getting listed on the Stock Exchanges is the major ambition of many growing companies. It highlights the past achievements and projects the future growth by accessing to more widely distributed capital. Rayon Capital helps the companies, especially the SMEs with strong business models and high growth potential to get listed on SME Stock Exchanges.
Companies can gain a lot from being listed on SME stock exchanges, including enhanced visibility, favorable capital gains tax treatment, valuation benchmarking, improved governance and internal controls, etc.
Our goal is to be at the heart of financial services industry and to make businesses expand across the globe– Jasbir Singh Batra
BENEFITS of listing on SME Stock Exchange:
Easy Listing
Easy access to Capital / Funds
Enhanced Visibility and Credibility
Encourages Growth of SMEs
Enables Liquidity for Shareholders
Equity Financing Through Venture Capital
Efficient Risk Distribution
Employee Incentives
100% IPO Underwriting
New Class of Investors
Migration to main Board on seasoning
ELIGIBILITY for listing:
| CRITERIA | BSE SME PLATFORM | NSE EMERGE PLATFORM |
|---|---|---|
| Incorporation | The Company should be incorporated under the Companies Act, 1956/2013 in India. | The Company should be incorporated under the Companies Act, 1956/2013 in India. |
| Post Issue Paid Up Capital | The post issue paid up capital of the company (face value) shall not be more than Rs. 25 Crores. | The post issue paid up capital of the company (face value) shall not be more than Rs. 25 Crores |
| Net Worth | Positive Net Worth | Positive Net Worth |
| Net Tangible Assets | Net Tangible Assets should be Rs 1.5 Crore. | |
| Track Record | The Company or the Partnership/ Proprietorship/LLP Firm, which has been converted into the Company, should have combined track record of at least 3 years OR The Company or the Firm, which have been converted into the Company should have combined positive cash accruals (Earnings Before Depreciation and Tax) in any of the year out of last three years and its net worth should be positive. | The Company or the Partnership/ Proprietorship/LLP Firm, which has been converted into the Company, should have combined track record of at least 3 years OR The Company or the Firm, which have been converted into the Company should have combined positive cash accruals (Earnings Before Depreciation and Tax) in any of the two years out of last three years and its net worth should be positive. |
| BIFR Company | The Company should not have been referred to Board of Industrial and Financial Reconstruction (BIFR) Company out of BIFR is allowed | The Company should not have been referred to Board of Industrial and Financial Reconstruction (BIFR) |
| Winding Up | No petition for winding up is admitted by a Court against the Company | No petition for winding up is admitted by a Court against the Company |
| Disciplinary Action | No material regulatory or disciplinary action by a Stock Exchange or Regulatory Authority in the past three years against the Company | No material regulatory or disciplinary action by a Stock Exchange or Regulatory Authority in the past three years against the Company |
| Website | It is mandatory for a Company to have a website | It is mandatory for a Company to have a website |
| Dematerialization of Securities | It is mandatory for the Company to facilitate trading in DEMAT securities and enter into an agreement with both the depositories | It is mandatory for the Company to facilitate trading in DEMAT securities and enter into an agreement with both the depositories |
| Change in Promoters Holding | There should not be any change in the Promoters of the Company in preceding one year from the date of filing the application for listing under SME segment | |
| Underwriting | The issue shall be 100% underwritten and Merchant Bankers shall underwrite 15% in their own account | |
| Market Making | Mandatory for three years | |
| Public Shareholding | Minimum 50 Investors (Post listing, it’s not necessary) | |
| Site Verification | Site visit by the Exchange | |
| Promoter’s Interview | Promoter has to attend the interview with Listing Advisory Committee (LAC) of the Stock Exchange |
Process involved for SME IPO:
- Planning IPO and appointment of Merchant Banker in an Advisory Capacity
- Conducting Due-Diligence and structuring the IPO
- Appointment of Intermediaries
- Marketing Strategies
- Preparation and Filing of Draft Prospectus with Stock Exchange and SEBI
- Verification of documents and Site visit by Stock Exchange
- The Promoters are called for an interview with the LAC (Listing Advisory Committee) of the Stock Exchange
- Preparation of final offer document on receipt of observation / comments from LAC
- Filing of RHP / Prospectus with the ROC indicating date of opening and closing of IPO issue
- ROC Approval
- Intimation to Stock Exchange of opening & closing of issue and filing of documents
- Opening of IPO issue
- Receiving of Application & Closure of IPO issue & IPO management
- Submission of documents to the Stock Exchange for finalization of the Basis of Allotment
- Receipt of Stock Exchange’s Approval to the Basis of Allotment
- Allotment of Shares / Refund and Filing of Listing Application with the Stock Exchange/li>
Finally Listing of Shares on Stock Market and Market Making of Shares
How Rayon Capital help you with SME IPO Listing on BSE and NSE Platforms?
Rayon Capital offers complete support and guidance for the SME listing procedure and execution. We assist SMEs in realizing their ambition of listing on the Stock Exchanges
We assist SME’s in listing their shares on the BSE SME platform and NSE SME platform through our efficient processes.
Why Rayon Capital is the Best for SME IPO Listing?
We provide end-to-end support for raising growth capital from various financial institutions and work closely with SMEs with more than three years of excellent track record of generating strong revenue growth and considerable profit margins.
Save Time
- Rayon Capital has 22+ years of experience into your capital-raising strategy and building your equity story.
- Our experience team working with your management to provide guidance at every step.
Reduce Cost
- Rayon Capital reduces the involvement of your management team and other company personnel and allowing them to focus on their regular tasks.
Enhanced Transaction Certainty
- Effective combination of Rayon team, company story, timing and pricing of IPO
- Experienced Rayon Team with multiple fund-raising experience
- Complete shortlisting of intermediaries for successful execution of IPO transaction.
- Increasing your potential investor base
knowledge Share
- Access to Rayon Capital’s knowledge base with respect to post IPO listing
- Training your finance team to comply with post listing requirements
- Knowledge share with management for ongoing perception building with the key stakeholders, post IPO listing