Well, SME IPO stands for Small and Medium Enterprise Initial Public Offering. In this process, private companies categorized as small and medium enterprises raise funds through public offerings. These SMEs then become listed on platforms like BSE SME or NSE Emerge. This dedicated SME IPO platform offers an avenue for smaller companies to be included on the indices. To be eligible for an SME IPO, two key criteria must be met: firstly, the post-issue paid-up capital should be below Rs. 25 crores, and secondly, a minimum post-issue capital of Rs. 1 crore is required.

Expanding Your Investment Portfolio: Including SME IPOs in your investment portfolio can enhance diversification, diminishing dependence on conventional large-cap stocks. According to research conducted by Cambridge Associates, venture capital investments in small businesses have the potential to deliver superior long-term performance compared to traditional stocks.

Small and Medium Enterprises (SMEs) have the capacity to secure the necessary funds for various purposes, including sustaining operations, expanding, acquiring new ventures, developing new products, and more. When SMEs go public through an IPO, it raises public awareness, garners media attention, and enhances their visibility. Listing shares on the stock market also encourages greater investor involvement and engagement.

Nevertheless, there are variations in trading regulations. To start with, the SME exchange stipulates a larger-than-usual lot size, which represents the minimum number of shares you can purchase or sell in a single transaction. Transactions below the value of Rs 1 lakh are not permitted. Additionally, the lot size fluctuates in accordance with the stock’s price.

An initial payment of Rs 50,000 is required. This amounts to 0.01% of the issue size, with a minimum of Rs 25,000 and a maximum of Rs 50,00,000.

BSE SME is the dedicated platform within the Bombay Stock Exchange (BSE) designed for Small and Medium Enterprises (SMEs). SMEs utilize this platform to secure funding from the public and become listed on the exchange by offering shares of their company. These SME stocks are traded on the same exchange as regular companies.