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In India, there are two platforms or exchanges including BSE SME and NSE Emerge where SMEs can list their securities to become a listed company. Growing startups can raise money from the public by issuing shares in the market and listing their securities on one of the SME exchanges. The SME platform is an emerging and transparent marketplace for startups to raise capital.
The SME Exchange allows growing small and medium enterprises with minimal compliance to list their shares and raise capital for various purposes such as acquisition, expansion, etc. Both SME exchanges follow a credible listing process and are governed by SEBI rules and regulations. When an SME decides to go public, the merchant banker or lead manager selects the exchange on which to list its securities.
In India, the Over The Counter Exchange of India (OTCEI) was established in 1989 to provide access to the capital market for small and medium enterprises. It was the first screen-based exchange for listing small and medium enterprises with a paid-up capital of at least 30 lakhs. However, the concept failed due to technological problems and regulatory ambiguities. Subsequently, in 2010, the market regulator SEBI issued new guidelines for the establishment of a dedicated SME stock exchange. Under this initiative, the BSE and NSE launched the BSE SME and NSE Emerge (NSE SME) platforms in India in 2012.
SME entrepreneurs who want to become a listed company can issue an IPO and list their shares on either the BSE SME or NSE Emerge platforms. SME exchanges are the dedicated platform for trading of small and medium-sized companies' shares.
Eligible SMEs with post-issue paid-up capital of not more than Rs 25 crore can issue SME IPO and list their shares.
Listing of shares on SME exchange helps owners to raise the required capital and also improves credibility and brand image.
The BSE SME and NSE SME or NSE Emerge exchanges have different eligibility criteria based on tangible net worth, operating history, profitability, etc. SME owners seeking an IPO must first verify that they meet the eligibility criteria of respective SME platform in order to select the right exchange for listing.
The IPO Lead Manager/Merchant Banker will assist you in selecting the right exchange for listing shares.
BSE SME is the largest SME Platform in India. In 2012, the Bombay Stock Exchange (BSE) set up the BSE SME platform for SMEs. The platform enables SME companies to list their shares on the exchange. BSE SME exchange assists SMEs in their foray into the capital market by raising equity capital to finance future growth, expansion, and strategic acquisitions. On the other side, it provides a transparent and regulated entry/exit route to investors. Private investors can find out opportunities to invest in good companies at an early stage.
BCB Finance was the first listed company on BSE SME in 2012. Over the last 10 years, more than430 entrepreneurs preferred to list their shares on the BSE SME exchange and raised a total capital of Rs 4,982.71 crore. As of 24 May 23, the total market capitalization of companies listed on the BSE SME is Rs 66,377.32 crores.
SMEs that want to list their securities on the BSE SME platform must comply with several prerequisites pursuant to post-issue paid-up capital upto Rs 25 Cr, positive net worth, net tangible assets upto Rs 1.5 crore, and 3 years of operating history and financial records.
NSE Emerge or NSE SME platform is an initiative by National Stock Exchange (NSE) to enable startups to obtain funding by issuing shares initial public offering. NSE Emerge is a credible marketplace that brings convergence between emerging startups/corporate and private investors. The SME listing exchange is a great opportunity for sophisticated investors to invest in emerging corporate with innovative business models and exciting growth plans. Emerge is a platform for emerging SMEs to raise capital from High net-worth individuals (HNIs) and institutional investors.
Credible admission process, state-of-the-art trading system, dissemination of high-quality information to investors, and SME mentoring are the top reasons to choose NSE Emerge as a preferred destination for capital formation.
Thejo Engineering from Chennai was the first NSE Emerge listed company in India. As on May 24, 2023, there are a total of 319 companies listed on NSE SME.
Any SME seeking to list on the NSE SME exchange must adhere to the NSE SME IPO issue eligibility criteria for going public. The regulatory norms include post-issue paid-up capital not exceeding Rs 25 crores, positive net worth, at least 3 years of financial track record, and distributable profits for at least 2 years.
| BSE SME | NSE Emerge | |
|---|---|---|
| Number of listed companies | 436 | 309 |
| Amount raised | 5,007.55 Cr | _ |
| Companies migrated to mainboard | 172 | 133 |
| Companies eligible for trading | 264 | 176 |
Data: As on 7 June 23
Once scrips are listed on any SME platform, investors can trade in shares through their respective stockbroker's platform. A SME who lists securities in the SME segment of BSE will be available in the "M" Category whereas SME shares listed on the NSE Emerge will be available in the "SM" category. Shares listed in both these categories will be traded (buy and sell) only in multiples of their lot size. Thus, investors cannot buy a single share or an odd quantity of shares for trading. An investor can buy or sell SME shares on or after the date of shares are listed on the SME platform.
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SME stocks mean shares of new, early-stage small and medium-sized companies with high growth potential. In India, both the BSE and NSE have launched a dedicated SME exchange to provide a robust fund-raising platform to SMEs. Small and medium-sized companies with maximum paid-up capital of Rs 25 crores can issue their shares to the public to raise capital and get listed on the BSE or NSE SME exchange.
India’s largest stock exchanges BSE and NSE have separate SME platforms for listing SME’s shares. Any SMEs can list their shares on the BSE SME and NSE SME (NSE Emerge) platforms. Both of these platforms are governed in accordance with SEBI regulations and have different issue eligibility criteria for shares listing.
SME Exchange is a platform for small and medium-size entrepreneurs to collect funding for business growth and expansion. It is a dedicated stock exchange for trading the shares of SMEs. The concept of SME Exchange originated from the challenges that SMEs face to raise capital, getting good trading volumes, and gaining visibility.
A dedicated stock exchange for SMEs help entities to find a perfect solution for their funding requirements. The listing of securities on the SME exchange provides better valuation, strong visibility, and improve company’s balance sheet.
No, as per SEBI ICDR (Issue of Capital and Disclosure Requirements), IPO grading is not mandatory for the securities listing on the SME exchange. IPO grading is the process of assigning grading by SEBI registered Credit Rating Agencies (CRAs) to the initial public offerings of equity shares.
No, the suspended companies cannot issue shares to list on the BSE SME platform unless the suspension is revoked and the entity is granted permission to trade shares on the main board.
As of April 4, 2022, there are a total of 744 companies listed on BSE SME and NSE Emerge together. BSE SME has higher number of SMEs listed to 430 while NSE SME has 314 listed companies.
