SME IPO FAQs:

What is SME?

Small and mid-size enterprises (SMEs) are businesses that maintain revenues, assets or a number of employees below a certain threshold.

What is SME IPO?

SME IPO is a way for a privately owned Small and medium enterprises (SME) company to sell its shares to the public for the first time and gets listed at BSE SME or NSE Emerge platform

What is Listing in SME IPO?

Listing takes place after the entire process of allotment and refund is made. It enables the stocks to be traded for the first time in the market.

What is the SME IPO Listing Date?

The listing date of an IPO is when the stock opens for trading for the first time in the market. This is done only after the entire process of allotment & refund is complete.

What is Listing Price?

The listing price is the price at which the shares trade on a stock exchange after the IPO. First, the issue price is set by the company, while the listing price is determined by supply and demand in the market.

There are 2 types of IPO’s- Book Building and Fixed Price IPOs. Book Building IPOs will have a price range, say Rs 250-275 and investors need to bid within the price range. Fixed price issue has a specific price to bid.

What is SME IPO Issue Size?

The IPO size refers to the total monetary value of the IPO, calculated by multiplying the total number of shares by the price per share.

What is Exchange?

A stock exchange brings companies and investors together. A stock exchange helps companies raise capital or money by issuing equity shares to be sold to investors. The companies invest those funds back into their business, and investors, ideally, earn a profit from their investment in those companies.

What is SME IPO Open Date / Close Date?

The opening and closing date of the IPO bidding process. Investors can apply in an IPO during this time only.

Who can Invest in SME IPO?

Investors are divided into three main categories:

1. Qualified Institutional Buyer (QIB)
QIB portion which comprises

• Mutual funds
• Domestic Financial Institutions: Banks, Financial Institutions and Insurance Companies
• Foreign Institutional Investors
• Others

2. Non Institutional Investors (NII)
NIIs comprise

• Corporates
• Individuals other than retail investors
• Others

3. Retail Individual Investors

How can one Apply in Upcoming SME IPOs Online?

The online process is a simplified one to apply for IPOs. Investors can apply from the website or mobile app of stockbrokers, using UPI as a payment option.

Log in to the console and enter required and UPI handle details before placing the bid. All IPO application is supported by ASBA or Application Supported by Blocked Amount, which allows the bank to block the amount for the bid value until the IPO.

What is the Process of Investing in an SME IPO Online?

1. Choose the SME IPO That you Want to Invest in

We generally know the latest IPO calendar of a particular year beforehand. Investing in an IPO requires research as we may not have a lot of historical data on the performance, management and other crucial fundamental factors. This is when we compare that company to a listed company. Hence, determining the IPO that you want to invest in is an essential first step. Every company that launches an IPO, shares a prospectus with the public offering details about the company’s business and future plans. Go through this prospectus thoroughly and research the company before making a decision.

2. Open the Required Accounts

You need the following three accounts to invest in a new IPO and trade them in the secondary market eventually:

Demat Account: This is where you store your shares in an electronic form.

Bank Account: A bank account is required to fund your share market transactions. However, a bank account can come in handy to apply for an IPO as well. Almost all net-banking platforms have the facility to apply for IPOs through the Application Supported by Blocked Amount (ASBA) facility.

Trading Account: Trading account is used to buy and sell shares. You can open a trading account with Upstox, Zerodha, AngelOne.

3. What happens after you Apply for an SME IPO?

The process is a little different. When you apply for a company’s IPO, regardless of any method of application, the aggregate amount gets blocked from your bank account. It will show up in your balance but will not be available for use. Once the allotment is finalized, if you have received the shares the amount will get debited from your account. If you have not received any shares in the IPO, the amount will be unblocked and will be available for use.

You can see how the initial public offering is applied from the demat account of different brokers by clicking on the name of the broker.

Upstox, Zerodha, AngelOne

To know more on SME IPO terms or to get expert answers to your specific questions on SME IPOs, Please visit:

All SME IPO FAQs

However, make sure to always read the prospectus carefully and run due diligence to weigh the pros and cons of the offer before investing in any SME IPO.

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