Explore the Market Possibility with Sme IPO

Everyone has dreams and most of us want our dreams to come true. Similar to big companies, small companies also dream of getting themselves listed on the stock exchanges in order to raise fund for there venture.

Going public provides SMEs with equity financing opportunities to grow their business from operations to expansion to inorganic acquisitions. Access to equity financing lowers the debt burden leading to lower financing costs and healthier balance sheets. The continuing requirement for adhering to stock market rules for the issuers lowers the ongoing information and monitoring costs for the banks. 

Lesser compliance's compare to main board listing so convenient for SMEs. Half yearly financial results, shareholding pattern is to be complied with exchanges on a half yearly basis. No publication of financial results in a newspaper, only hosting on a company’s website is enough 

Going for a public issue is most likely to enhance the company's visibility. Greater public awareness gained through media coverage, and research coverage by sector investment analysts provide the SMEs with greater visibility and help brand building which otherwise may remain a dream especially for SMEs.Income- tax Act offers immense benefits to companies if their shares are listed on SME Exchange  

One of the major attractions for SME IPO remains the provision of migration to the main exchanges. Any company listed at the SME platform, after crossing the threshold of Rs 10 Cr Capital may migrate to the main exchange and upon crossing the threshold of Rs 25 Cr has to mandatorily migrate to the main exchange. 

Benefits Of SME IPO

Ease To Raise Fund

SMEs, by virtue of the nature of their industry and working patterns were unable to tap markets to raise equity and debt to fund their projects. Some of these with viable greenfield projects are not able to implement or execute them for limited funds availability. With the easing of IPO norms for SMEs, these SMEs found a solution to raising funds. SME Listing provides an avenue to raise capital through equity infusion for growth oriented SME’s.

Less Regulatory Control

As against an IPO on the main exchanges, for a SME IPO, there are multiple benefits in terms of regulatory supervision and controls – both at the time of the IPO and on routine compliance under the listing agreement and regulations.

Visibility and Credibility 

Listing provides these SMEs with the benefit of greater credibility and enhanced financial status leading to higher valuation of the company on one hand and improved customer-client credibility on the other. Even banks and financial institutions prefer to fund listed SMEs as against an unlisted one.

Unlocking hidden value

 As there is no market available for trading of shares of an unlisted company, the fair market value of such companies is difficult to arrive at. Accordingly, listing helps to unravel real value through market-driven mechanism.

Eased Tax Planning 

Any share transaction through stock exchanges is exempt from the provisions of Long Term Capital Gains (LTCG). Rather, these transactions happen on payment of Securities Transaction Tax (STT), which acts as a major booster for share transactions

Encourages SME growth

Equity financing provides growth opportunities like expansion, mergers and acquisitions thus being a cost effective and tax efficient mode

Migration provisions

One of the major attractions for SME IPO remains the provision of migration to the main exchanges. Any company listed at the SME platform, after crossing the threshold of Rs 10 Cr Capital may migrate to the main exchange and upon crossing the threshold of Rs 25 Cr has to mandatorily migrate to the main exchange

Investor Benefits

1.

Easier liquidity and exit

Listing would provide liquidity to shareholders and at the same time would offer exit options to venture capital and private equity investors 

2.

Tax Benefit

No long term capital gains tax will be applicable on transfer of shares through exchange, on payment of Securities Transaction Tax (STT) 

3.

Well-organized

Capital markets strengthen in-built mechanism of risk transfer from one person to another through well-organized market forces 

PROCESS & TIMELINE

24 PROCESS AND JUST 98 DAYS TO LIST YOUR VENTURE IN EXCHANGE

1.

7 DAYS

Conversion of Company into Public Limited Company, if applicable

2.

3 DAYS

Preparation of Documents for conversion and submission to ROC for approval i.e. Alteration of Memorandum, Articles & filing of necessary forms for appointment of aforesaid directors

3.

4 DAYS

ROC approval accorded for conversion

4.

7 DAYS

Identification & appointment of Registrar & Transfer Agents & Submission of Master Creation forms with NSDL, CDSL for establishing connectivity

5.

12 DAYS

Appointment of Managing Director, Whole Time Director, Independent Directors, Company Secretary & deciding about their remuneration, sitting fees etc.

6.

15 DAYS

Constitution of committees – Audit, Shareholder Grievance, Remuneration etc. As per SEBI Listing Obligations and Disclosure Requirements Regulations

7.

12 DAYS

Preparation of website of the Company & hosting code of conduct on the website

8.

8 DAYS

Signing of Tri-Partite Agreement with NSDL & CDSL and receipt of ISIN

9.

2 DAYS

Identification & appointment of peer review auditors & getting the financials of last 5 years restated and for last 1 year re-audited from peer review auditors as per SEBI (ICDR) Regulations, 2009

10.

5 DAYS

Appointment of Merchant Banker & Market Maker

11.

12 DAYS

Preparation of Project Report and Draft Red Herring Prospectus (DRHP) / Prospectus

12.

2 DAYS

Filing of Draft Red Herring Prospectus (DRHP) with stock exchange & SEBI (only for hosting)

13.

20 DAYS

Visit to registered office of the Company by BSE officials and promoters interview with Listing Advisory Committee

14.

10 DAYS

In Principle approval from stock exchange

15.

5 DAYS

Filing of Draft Red Herring Prospectus (DRHP) with ROC & getting it cleared from ROC

16.

5 DAYS

Filing of Final Prospectus with Stock exchange and SEBI

17.

8 DAYS

Opening of the Issue

18.

7 DAYS

Closing of the Issue

19.

3 DAYS

Allotment of shares

20.

3 DAYS

Filing of listing application with Stock exchange

21.

1 DAYS

Receipt of listing approval from Stock exchange

22.

2 DAYS

Filing of corporate action form with NSDL & CDSL and demat credit of shares

23.

3 DAYS

Filing of trading application with Stock exchange

24.

2 DAYS

Receipt of trading approval from Stock exchange

Why Hire CA

Our collaboration – engagement, network, passion and experience – gives entrepreneurs the unfair advantage needed to win, and win big.Hire CA helps entrepreneurs build some of the world’s most disruptive, successful companies. We partner with entrepreneurs who have grand ambitions – who want to tackle big, hard problems that most think not possible.

Hire CA is a multi-strategy asset management advisory firm with a focus on capital investments in manufacturing, technology and growth equity investments in modern industry.

The equity market is our favorite battlefield where investments in growth and late stage companies is where we begin with.

Hire CA is backed by Global Investors, Entrepreneurs and Equity market leaders.We believe the world can never get enough magical products and experiences.

Pricing

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1 Crore + 5 % OF Fund Raising

We Always Deal with simple pricing plan
For Example you Are planning to raise 10 crore
then Total Price would be : 1 Crore +  50 lacs
Total : 1.50 crore

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