What is the Difference Between SME IPO and Mainboard IPO?

Last Updated: 22 Jan 2025

An Initial Public Offering, or IPO, is a company’s first-ever share sale to the general public with the goal of raising capital for expansion. IPOs come in two varieties: mainboard IPOs and SME IPOs. Issue sizes are the primary distinction between the two, with major board IPOs having larger issue sizes than initial public offerings (IPOs) by small and medium-sized businesses.

Additional distinctions pertain to paid-up capital, the minimum quantity of allottees, the vetting of IPO prospectuses, underwriting, minimum application size, and market making. So, to know more about the difference between SME to Main Board IPO read on to: –

What is Main Board IPO?

A Mainboard IPO (Initial Public Offer) occurs when a privately owned company sells shares to the general public for the first time and is listed on stock markets. The post-issue paid-up capital requirement of these large organisations is a minimum of Rs. 10 crores. A premium is frequently charged to current private investors.

Additionally, to maximise the return on their investments, private investors may, therefore need to make the switch from a private to a public company.

What is an SME IPO?

A small to medium-sized business’ first public offering, or SME IPO, is an offer to sell shares for the first time. The post-issue paid-up capital for an SME IPO cannot be more than Rs 25 crore. There are two SME platforms in India for listing SME shares: BSE SME and NSE SME (NSE Emerge).
Difference Between SME and Mainboard IPO?

Aspect	SME IPO	Mainboard IPO
Definition	SME IPO stands for Small and Medium Enterprises Initial Public Offering. It is specifically designed for both small and medium-sized enterprises seeking to raise capital from the public markets.	Mainboard IPO refers to the initial public offering conducted on the mainboard of a stock exchange. Large corporations with substantial operations and financial standing typically undertake it.
Eligibility Criteria	SMEs opting for an SME IPO must meet some eligibility criteria set by the regulatory authorities, such as minimum net worth, track record, and profitability.	Companies planning a mainboard IPO are subject to more stringent eligibility requirements compared to SMEs. These may include a higher minimum market capitalisation, longer operating history, and profitability track record.
Regulatory Framework	SME IPOs are regulated by the SME Exchange platform, which is a specialised segment of the stock exchange catering to the needs of small and medium-sized enterprises.	Mainboard IPOs fall under the regulatory framework of the mainboard segment of the stock exchange, which adheres to broader regulatory standards applicable to all listed companies.
Market Exposure	SME IPOs typically offer limited market exposure compared to mainboard IPOs. Due to the small size and scale of SMEs, they may attract less attention from institutional investors and analysts.	Mainboard IPOs provide greater market exposure as they are listed on the mainboard segment of the stock exchange, which tends to attract more investor interest and media coverage.
Funding Potential	While SME IPOs offer a means for SMEs to access capital from the public markets, the funding potential may be relatively lower compared to mainboard IPOs.	Mainboard IPOs offer substantial funding potential, allowing large corporations to raise significant amounts of capital to support their growth and expansion initiatives.
Listing Requirements	The listing requirements for SME IPOs are tailored to accommodate the specific characteristics and needs of small and medium-sized enterprises, with a focus on simplicity and ease of compliance.	Mainboard IPOs are subject to comprehensive listing requirements aimed at ensuring the integrity, transparency, and stability of the capital markets. These requirements are often more complex and rigorous compared to SME IPOs.

 

The Bottom Line

In conclusion, each type of initial public offering (IPO)—BSE SME and main board—has pros and cons of its own. Before making any investment decisions, investors must examine the firm, its potential for growth thoroughly, and its prospects going forward. Investors can enter the stock market with confidence and make well-informed judgments if they are aware of the distinctions between these two forms of initial public offerings.

Frequently Asked Questions

What is the difference between an SME IPO and a mainboard IPO?

The main difference lies in the listing requirements. SME IPOs are for smaller companies with lower capitalisation, while mainboard IPOs are for larger, more established companies. Additionally, the process and timeline for an SME IPO are shorter compared to a mainboard IPO.

Are SME IPOs more affordable for retail investors compared to mainboard IPOs?

Yes, SME IPOs are usually offered at lower prices, making them more affordable for retail investors compared to mainboard IPOs.

What is the level of public scrutiny on an SME IPO vs a mainboard IPO?

Mainboard IPOs are subject to greater public scrutiny and regulatory oversight due to their larger size and established presence in the market. In contrast, SME IPOs are relatively less known and have fewer stakeholders.

Can both SME IPOs and mainboard IPOs be listed on any stock exchange?

Yes, they can both be listed on a stock exchange. However, mainboard IPOs are usually listed on major stock exchanges, while SME IPOs may also be listed on smaller stock exchanges.