The difference between Mainline IPO and SME IPO is minimal. It lies in the size of the companies eligible for each type of IPO. Least allotment norms, IPO underwriting requirements, and other regulatory aspects also matter.
Mainline IPOs are for larger companies with a least post-issue paid-up capital of Rs 10 crores. These companies can raise funds and get listed on the major stock exchanges in India. Mainline IPOs have a larger equity size, and the least number of allottees should be 1000. Underwriting for Mainline IPOs is non-mandatory. Also at least 50% subscription to Qualified Institutional Buyers (QIBs) is compulsory.
But, SME IPOs are for small and medium-sized enterprises. They have a least post-issue capital of Rs 1 crore and a most of Rs 25 crore. These companies can raise funds and list on specialized platforms. SME IPOs have a smaller equity size compared to Mainline IPOs. The least number of allottees should be 50. Underwriting for SME IPOs is mandatory. Merchant bankers underwriting 15% of the IPO.
Read more on Nirman Agri IPO here.
Another difference between the two types of IPOs is the IPO application size. Applying for one lot in a Mainline IPO usually costs around Rs 10,000 to Rs 15,000. While SME IPOs start with the least investment of Rs 1,00,000.
The track record requirements for Mainline IPOs are more stringent. It requires companies to have a profitable record for the last three years. In contrast, SMEs need to have positive cash flows for the most recent two years. The review of processes is done by the stock exchange rather than SEBI.
Furthermore, reporting requirements differ. Mainline IPOs require quarterly reporting. SME IPOs require reporting on a half-yearly basis.
In summary, Mainline IPOs are for larger companies with a higher capital base. It involves a larger number of allottees, and has more stringent underwriting and reporting requirements.
On the other hand, SME IPOs cater to smaller enterprises with a more relaxed regulatory framework, smaller equity size, fewer allottees, and mandatory underwriting.
Both types of IPOs provide opportunities for companies to raise capital from the public and facilitate growth in the Indian economy.
