Mainboard IPO vs SME IPO: Key Differences

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Mainboard IPO vs SME IPO: Key Differences

Registrationwala

Initial Public Offering (IPO) is the process by which a private company makes its shares available to the public for the first time. In India, we have two different types of IPOs, namely, mainboard IPO and SME IPO. Whether you’re an investor or a business entrepreneur, knowing about the difference between mainboard IPO and SME IPO is crucial. 

What is a Mainboard IPO?

Mainboard IPO is opted by large, well-established organizations to raise capital from the public markets. Organizations wanting to raise capital through mainboard IPO are required to comply with comprehensive listing requirements set by stock exchanges when they plan to get listed, such as Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). 

 

The requirements are related to minimum thresholds for profits, revenue, market cap, no. of shareholders, and corporate governance standards. Many institutional investors like banks, large funds, and NBFCs are attracted to mainboard IPOs due to the larger size and stability of the companies to which these IPOs belong.

What is an SME IPO?

SME IPO is opted by small and medium enterprises to raise capital from the public markets. The Mainboard IPO process is pretty strict and requires compliance with a long list of requirements, and not every company can meet these requirements. This is why SME IPOs are a blessing for small and medium-sized companies. Companies that do not fulfill the stringent requirements of a mainboard IPO can still raise capital from the public markets by choosing an SME IPO.

 

The stock exchanges have different listing criteria for SMEs, which are relatively easier to fulfill. SMEs require less revenue, a smaller market cap, and a smaller operational scale to launch an SME IPO. Compared to mainland IPO, SME IPO attracts different investors, such as individual retail investors, local institutional investors, and small funds. Investors who make investments in SME IPOs generally have a higher risk appetite, and they’re more inclined toward growth potential.

Table of Difference: Mainboard IPO vs SME IPO

Here is a table which represents the difference between SME IPO vs Mainboard IPO in an easy way:

Parameters

SME IPO

Mainboard IPO

Post-issue Paid-up Capital

SME companies must have a post-issue paid-up capital between Rs. 1 to  25 crore.

Mainboard IPOs must have a post-issue paid capital of a minimum of  Rs. 10 crore.

Application size

Application size must be greater than Rs. 1 lakh for 1 lot.

Application size ranges anywhere between Rs. 10,000 to Rs. 15,000.

Time Frame for Launch

IPO time can be between 3 to 4 months of IPO time frame.

IPO time frame can be between 6 months.

Share-selling Limitation

IPO shares cannot be sold individually. An entire lot has to be sold.

The IPO shares can be sold individually in the secondary market.

Report Submission Frequency

Mandatory for the Companies to provide a half-yearly report.

Mandatory for the Companies to provide a report for every quarter.

Minimum Allottees

The number of allottees should be at least 50.

The number of allottees should be at least 1000.

Conclusion

Whether we talk about Mainboard IPO or SME IPO, both are used by companies to raise funds from the public market. However, the Mainboard IPO is for large companies, while the SME IPO is for small and medium-sized companies. This is the main difference between Mainboard IPO vs SME IPO. Confused about whether your company requires a Mainboard IPO or an SME IPO? Connect with Registrationwala for IPO consulting services. We assist our clients during the entire IPO process and also help them file applications to SEBI and Stock Exchanges.

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