Mainboard vs. SME IPO: Key Differences Every SME Should Know | TriC Global

Explore the crucial differences between Mainboard and SME IPOs with TriC Global to determine the best path for your SME’s public offering.

Introduction

Embarking on an Initial Public Offering (IPO) is a significant milestone for any company, marking its transition from a private entity to a publicly traded one. For Small and Medium Enterprises (SMEs) considering this leap, understanding the nuances between different IPO types is essential. This guide delves into the key differences between Mainboard IPOs and SME IPOs, helping SMEs make informed decisions about their public offering strategy.

What is an IPO?

An IPO, or Initial Public Offering, is the process through which a privately held company offers its shares to the public for the first time. This move not only raises capital but also enhances the company’s visibility and credibility in the market. IPOs can be categorized into two main types: Mainboard IPOs and SME IPOs, each tailored to different company sizes and needs.

Mainboard IPO vs. SME IPO

Mainboard IPO

A Mainboard IPO involves listing a company on major stock exchanges like the Bombay Stock Exchange (BSE) or the National Stock Exchange (NSE). This type of IPO is typically suited for larger companies with substantial growth and revenue.

Key Characteristics:

• Post-Issue Capital: Minimum of Rs 10 crores.
• Eligibility: Companies must meet strict criteria, including profitability and asset requirements.
• Underwriting: Not mandatory if 50% of shares are allocated to Qualified Institutional Buyers (QIBs).
• Listing Exchanges: Listed on main exchanges like BSE and NSE.
• Reporting: Requires quarterly financial reports.

Examples:
– Swiggy
– Hyundai Motors
– NTPC Green Energy IPO

SME IPO

An SME IPO is designed for small and medium-sized enterprises seeking to go public. These IPOs are conducted on specialized platforms within major exchanges to accommodate the unique needs of smaller companies.

Key Characteristics:

• Post-Issue Capital: Capped at Rs 25 crores.
• Eligibility: More relaxed criteria compared to Mainboard IPOs, facilitating easier access for SMEs.
• Underwriting: Requires 100% underwriting with at least 15% from merchant bankers.
• Listing Exchanges: Listed on SME platforms like BSE SME or NSE Emerge.
• Reporting: Requires semi-annual financial reports.

Examples:
– Alpex Solar Limited
– TAC Infosec Limited

Key Differences Between Mainboard IPO and SME IPO

Choosing the Right Path for Your SME

Selecting between a Mainboard IPO and an SME IPO depends on various factors, including your company’s size, growth trajectory, capital needs, and long-term strategic goals. Here are some considerations to help you decide:

• Company Size and Capital Needs: If your SME requires significant capital beyond Rs 25 crores, a Mainboard IPO might be more suitable.
• Regulatory Compliance: Mainboard IPOs come with stricter regulatory requirements, which might be challenging for smaller companies.
• Timeframe: SME IPOs generally have a shorter timeline to go public, which can be advantageous if you seek faster access to capital.
• Investor Base: Mainboard IPOs attract a larger and more diverse investor base, potentially leading to greater liquidity in the long term.

How TriC Global Can Assist

At TriC Global, we specialize in guiding SMEs through the complexities of the IPO process. Our “IPO as a Service” approach provides comprehensive support, from initial preparation to post-listing compliance. Leveraging over 20 years of expertise in capital markets, we ensure your SME is well-positioned for a successful public offering.

Our Services Include:

• IPO Readiness Strategies: Tailored plans to prepare your company for the public markets.
• Regulatory Compliance Assistance: Ensuring adherence to all necessary regulations.
• Investor Engagement: Connecting you with potential investors through our Global Partnership Network (GPN).

Conclusion

Understanding the differences between Mainboard and SME IPOs is crucial for SMEs aiming to go public. Each option offers distinct advantages and challenges, making it essential to assess your company’s unique needs and objectives. By choosing the right IPO path, your SME can achieve enhanced growth, visibility, and market presence.

Ready to take your SME to the next level? Discover how TriC Global can support your IPO journey today!