An SME IPO is an Initial Public Offering issued by Small and Medium Enterprises. SMEs are businesses that have their assets, revenues, assets, or number of employees lower than a specific cut-off level, which varies depending on the country and the industry. Governments from all over the world have realized the vital role SMEs play in their economy, and the same is true for India, where SMEs employ almost half the workforce. However, SMEs often face challenges in accessing capital, which is also the primary reason for them going out of business.
An SME IPO is a way for SMEs to raise capital by issuing their shares to the public for the first time in exchange for funds. The issue size of an SME IPO is usually very small compared to regular IPOs. Small and medium-sized enterprises with post-issue capital not exceeding ₹25 crores are eligible to issue their shares to the public via an SME IPO. The shares of such companies are listed on dedicated SME platforms such as the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) .
