The Securities and Exchange Board of India (SEBI) released a consultation paper on October 14 proposing significant changes to the rules governing initial public offerings (IPOs) of small and medium enterprises (SMEs). The regulator invited public feedback on the proposed framework until November 4. Since 2012, around 1,500 companies have listed on the SME platform, raising ₹40,222 crore, including startups like Zappfresh and DroneAcharya, according to inc42.com.
The proposed changes include allowing companies with a post-issue market capitalization of up to ₹1,000 crore to list on the SME platform. Firms valued between ₹1,000 crore and ₹4,000 crore can choose to list either on the SME platform or the main board, while those above ₹4,000 crore must list on the main board. SEBI also suggested lowering the minimum application threshold and removing mandatory underwriting and market-making requirements to ease the listing process for SMEs.
These revisions come amid a rapid increase in funds raised through SME IPOs and growing investor participation. The changes aim to make the SME IPO route more accessible and flexible, potentially encouraging more startups and smaller companies to go public. This could enhance liquidity and provide additional capital-raising avenues, aligning with the evolving market dynamics and investor appetite for SME listings.
The consultation paper is open for public feedback until November 4, after which SEBI will finalize the rules. The regulator’s working group formulated the paper in response to the expanding SME IPO market, which has seen ₹40,222 crore raised since 2012 from about 1,500 listings, per inc42.com.