SME IPOs offer a vital pathway for small and medium enterprises to access public capital markets. These Initial Public Offerings enable companies to raise funds...
An SME IPO (Small and Medium Enterprise Initial Public Offering) is the process by which small and medium-sized companies raise capital by offering shares to the public for the first time, typically listing on a dedicated SME platform of a stock exchange.
SME IPOs usually have relaxed regulatory requirements, lower listing costs, and smaller issue sizes compared to mainboard IPOs. They are listed on separate SME-specific platforms, often with lower trading volumes and higher minimum investment thresholds.
Advantages include access to capital for growth and expansion, enhanced brand visibility and credibility, improved corporate governance, better valuation opportunities, and an potential exit route for existing investors and promoters.
Key risks include lower liquidity due to a smaller investor base, higher price volatility, limited analyst coverage, and potentially less financial transparency compared to larger companies, along with the inherent business risks of smaller enterprises.