BY ROBIN GHOSH
( FORMER CHIEF ECONOMIST, BENGAL CHAMBER OF COMMERCE AND INDUSTRY)
KOLKATA, 13 OCTOBER 2022
Every startup has a secret aspiration to go for an IPO. The reason is : once you are able to list your company in the stock exchange, you will be able to unleash market valuation of your company and in the
process create wealth for all the stakeholders.
To upscale , every startup needs capital infusion. Fortunately India’s premier stock exchange platforms known as NSE and BSE have provided small and midsized companies a scope to raise equity capital for growth and upscaling.
Startups and small companies now can dream of going into big public listed companies, generating sustainable values and creating wealth for its shareholders.
With the Indian economy picking up and industry on a growth track, India’s SME – IPO space is positive. SMEs raised over Rs. 900 crores through IPOs in 2022 up nearly 4x from previous year.
But many startups are not very clear about the advantages of listing in the stock exchange platform. In short, the advantages are many:
1. Easier access to equity capital and scope for better funding opportunities.
2. Enables higher value generation by way of awareness gained by media coverage.
3. Helps balanced risk management for promoters by way of distributing the risk among a wider base of investors.
4. Easier and efficient entry/ exit platform for strategic investors lead to wider participation from private equity investors.
5. Another substantive advantage of listing in the stock exchange is brand elevation and brand visibility.
Can any startup or SME get listed in SME – IPO ? No. There are conditions and they are:
1. The post issue paid up capital should be less than Rs. 25 crores.
2. The company should be profitable for at least one to two years out of the last three years.
3. The company should be in existence for at least two to three years from the date of incorporation.
4. The company must have a website.
The next step is to know what is the procedure of getting your company listed for SME-IPO ?
It is a 4 stage procedure. And they are:
Stage 1
* Get a Feasibility Report on approximate IPO size, valuation
* Appointment of IPO advisors
* Due diligence
* Preparation of restated financial statements including auditor’s report, capital structure and other certificates.
Stage 2
* Appointing Bankers and intermediates
* Filling of Draft offer documents with Stock Exchange and SEBI
* Respond to Stock Exchange and SEBI comments.
* Review the offer document and get it approved
* Filling of offer documents with the Registrar of Companies.
Stage 3
* Road Shows and investor meetings.
* Getting Anchor investors
* Launch of IPO
* Receiving bids/ applications
* Closure of IPO
Stage 4
* Allocation and allotment
* Obtain listing approvals
* Listing on stock exchange
What has been described is a birds’ eye view of various stages to be crossed when you plan to list your company in the stock exchange. Listing in the stock exchange needs professional guidance. Hence it is advisable that Startups/ SMEs appoint Consultants to execute listing jobs with accuracy and within a given time frame.
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