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A Complete Guide to Understand SME IPO Trends | Amicus Growth Advisors

Discover the latest SME IPO trends with Amicus Growth Advisors' comprehensive guide. Unlock insights and navigate the SME IPO landscape effectively.

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A Complete Guide to Understand SME IPO Trends | Amicus Growth Advisors

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  1. Home Product Features Contact SME IPO Trends A Complete Guide to Understand SME IPo Trends December 2023 Input a summary about the purpose here or the message and issue of what you want to tell. Explore More

  2. SME Business Classification Criteria Small Enterprise Medium Enterprise Not more than Rs 10 crore Not more than Rs 50 crore Investment in PPE Not more than Rs 250 crore Not more than Rs 50 crore Annual Turnover

  3. SME IPOs are Shining Average Amount Raise Per IPO In India, SME platform was introduced to serve as a medium of equity financing for small and medium enterprises which are not able to list their issues on main board of stock exchanges because of the stringent eligibility criteria. Since its inception in 2012, it has been actively serving its rationale. During these 12 years, over Rs 13,500 crore was raised on the two platforms. Rs 13,500 Cr + 880+ Total SME IPOs Listed Raised Through SME IPOs

  4. Boom in SME Stocks A mere Rs.1,000 investment in August 2012 would be worth Rs. 4.65 lakh by 2023, translating to a staggering 46,500% return over a decade.

  5. The Year of SME IPOs 2023 Return Range for IPO that are Listed in 2023 , with overall Average Being 35% 9% -8% 36% 64% 93% 158%

  6. Sector Wise SME IPOs in Last Decade (Top 20 Sectors of IPO)

  7. Lead Manager Performance There have been more than 400 SME IPOs in Last 5 Years. But Around 260 issues were managed by Top 10 Lead Managers Avg Listing Day Gain

  8. SME IPO - Migration to Main Board The Silk Route to the Main Board SME listed companies may migrate to main board by two methods Compulsorily Voluntarily when issue capital of when issue capital of company exceeds Rs. 25 company exceeds Rs. 10 crore crore but below Rs. 25 crore SMEs migrated to BSE and NSE Mainboard As on Nov 30, 2023, total of 886 companies listed together on the BSE and SME exchange in India so far. Out of these, 319 companies have migrated to the main board exchange. BSE SME NSE Emerge Total SMEs Shifted to Main Board 181 138 319

  9. Migration Criteria Criteria Minimum Rs 10 crores post-issue paid-up capital Paid-up Capital Minimum paid-up capital Rs 10 crore. Minimum Rs 15 crore for the preceding 2 financial years. Net Worth Net worth requirement Rs 50 crore. Rs 25 crore or above based on the weighted average price of the preceding three months. Market capitalization minimum Rs 25 crore. Market Capitalization Listed on BSE SME platform for at least 3 years, earlier before Nov 23 it was 2 years. Listing period on NSE / BSE or track record Listing on NSE SME for 3 years. • Positive EBITDA for 3 preceding financial years is a prerequisite. • Profitable with positive PAT in the immediate financial year is essential. Positive EBITDA in any 2 out of the last 3 financial years, positive PAT in the immediate preceding financial year. Profitability requirement Minimum number of shareholders At least 250 public shareholders. Minimum 1000 public shareholders This list is indicative only and non exhaustive *

  10. Navigating the SME IPO Terrain: Unraveling Expenses and Intermediary Duties for Corporate Success

  11. SME IPOs Expenses The cost of SME IPO ranges from 50 lakhs to a few crores, For a small IPO of less than 25 crore rupees, the merchant banker charges a fee of about 25 lakhs, and 11 lakhs is for fees for various services. Misc Charges Underwriting expenses. Exchange Charges Services Fees Issuing company pays intermediary • • Stock Exchange Listing • Marketing and PR expenses. fees. • Out-of-pocket expenses for Fees: • Includes merchant bankers, registrar, intermediaries (travel, transportation, legal counsel, auditor, advertising, • Company pays fees for admission, communications, duplication, printing fees. processing, listing, and annual fee. procurement, and delivery of • Also covers market maker, • Fee structure for NSE SME Emerge documents). underwriting, bank fees, and other and BSE SME. • Expenses for road shows, site visits for professional fees. journalists, bloggers, and influencers.

  12. SME IPO Process Free structure (End to End Process) Service Expense Exchange _ Charges Misc. Charges _ ❖ Please note that above fee structure is for reference only

  13. Roles and Responsibilities of Merchant Bankers in SME IPO Planning the IPO structure • Type and number of securities. Educating the issuing company • The issuer's eligibility for listing, • Fully or partly paid-up shares. • Capital requirements, • Par value and lot size. • Minimum order quantity and price. • Market rules and regulations, • Proportion of investor categories. • the IPO process, and • Booking period details. • Employee reservation and discount. • Pre- and post-listing needs. • Market maker's share, etc. Submission of DRHP to Stock Exchange/SEBI/RoC File DRHP with stock exchange, SEBI, and Due Dilligence • Gather licensing and tax data. • • Compile audited reports. RoC. • Stock exchange reviews SMEIPO documents. • Collect board and employee information. • Exchange grants "In-Principle" approval. • Assess financial status and assets. • Approval conditional on meeting all • Analyze market growth data. requirements. • Evaluate company's IPO eligibility. • RoC issues final approval

  14. Roles and Responsibilities of Merchant Bankers in SME IPO Listing and post-issuance formalities Documents approved by SEBI and stock Drafting of Prospectus Underwriting • Comprehensive investor information. • Legal mandate: 100% underwriting for SME IPOs. • • Offering details and industry overview. • Minimum 15% obligation for merchant bankers. exchanges. • Remaining 85% managed by third-party fund • Shares listed under SME IPO launch. • Financial statements and IPO timeline. manager. • Merchant bank handles listing formalities. • Company liabilities, including legal challenges. • Issuing companies pay underwriting fees as a • Continues post-listing documentation and • Risks: industry, market, and company-specific. share price discount. compliance. Drafting of contracts IPO roadshow and publicity • Tripartite Agreement with NSDL, CDSL, and • Application filing and prospectus preparation Registrar • Organizes SME IPO roadshow for investors. • Underwriting Agreement & Market Making • Roadshow includes presentations to institutional, Agreement. mutual, pension, and hedge funds. • Agreement with Bankers, Registrar to Issue. • Key details presented: company model, financials, • Board/Shareholder Resolutions. legal disclosures, growth prospects, and offering • Forms/applications for filing with Exchange, RoC, specifics. and regulatory agencies.

  15. Roles of Chartered Accountant & Company Secretary in SME IPO Company Secretary Chartered Accountant • Advises the company on • Due diligence for regulatory compliance. • RoC compliance support. • Certification of financial statements. • Audit of financial statements • Financial due diligence. • Business forecasting and valuation. • Reviewing 3 years of restated financial information. • Certification of financial information (income statement, cash flow statement, or balance sheet) • Statement of Tax Benefit. • Certificate on Object of the issue. • Compliance with disclosure requirements. corporate restructurings. • Corporate and capital structuring. • Details of group companies. • Litigation and material developments. • Compliance with LODR and corporate governance. • Compliance with listing agreement. • Brokerage and securities audit.

  16. Roles of Registrars & Underwriter in SME IPO Registrars Underwriter Pre IPO - • IPO planning and resource alignment. • Informing Self-Certified Syndicate Bank (SCSB) of the IPO process and timelines. • Underwriting Agreement compliance oversight. • Selling agreed share quantity. • Purchasing unsold shares. • Co-organizing successful IPO roadshow. Between IPO Closure to Pre Listing - • Assisting in share valuation. • Receive the final bid file from the exchanges. • Validate the IPO application data. • Coordinate with bankers to ensure that final collection certificates are received. • Identify invalid applications to reject. • Reconcile the banked bids with the Final Bid file. • Prepare the basis of allotment with lead managers. • Submit the basis for approval to the Stock Exchange. • Process the allotment of shares. • Send funds debit and funds unblocking files to SCSBs. • Advising and supporting issuer. Post Allotment - • Resolve all the customer complaints.

  17. Roles of Banker, Merchant Banker & Legal Advisors in SME IPO Banker Legal Advisors Merchant Banker • Facilitate SME stock liquidity. • Provide 2-way quotes. • Guarantee execution of quoted orders. • Abide by defined bid-offer spread. • Restriction on buying from promoters. • Maintain a minimum quote depth. • Presence required for 75% of market time. • Ensure minimum inventory on allotment. • Instruct bankers for deposit • Assess legal eligibility for IPO. • Verify company and directors. • Provide legal advice on legal matters. • Draft legal documents, memoranda and related documents. • Review of legal materials. • Preparation of dispute resolution procedures. • Monitoring the implementation of legal clauses. coordination. • Send payment instructions to UPI. • Designate banks for handling tasks. • Clarify fund status for basis.

  18. The Business Think Tank Thank Contact Us You Sanjeev Jain Managing Partner sanjeev.jain@amicusllp.com Akshat Agrawal Engagement Manager akshat.agrawal@amicusllp.com +91-94259 24618 Pitch Deck By Amicus Growth Advisors

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