Cost of SME IPO Listing

Small and medium-sized enterprises (SMEs) looking to go public through an IPO face various charges and expenses. The cost of raising capital this way typically falls between INR 40-50 lakhs, amounting to about 7% to 15% of the IPO’s total size. Included in the cost of SME IPO is a range of fees, such as listing on the stock exchange, underwriting, merchant banking, registrars, advertising, marketing, and printing. In addition, there are brokerage fees and payments to various intermediaries and service providers such as legal advisors, lead managers, auditors, market makers, and depositories.

The exchange listing department closely monitors the company’s adherence to the listing agreement, particularly ensuring that the annual listing fees are paid on time. The cost structure for SME IPOs includes various charges incurred while raising capital through an initial public offering (IPO). Here is the detailed cost breakup of SME IPOs.

Recent SME IPOs witnessed heavy subscription rates with few SMEs receiving oversubscriptions of more than 400 times the issue size and have caught the attention of both retail and institutional investors. This surge in demand is driven by the potential for substantial listing gains, as evidenced by 92 out of 100 SME IPOs in the first 5 months of 2024 closing positively on their listing day. Some of the SME IPOs have offered stellar returns to investors after listing as well. While this has attracted more investors, such positivity has helped even business owners in becoming open to the idea of listing the business through SME IPO.

Here is a detailed view of the most important charges and costs related to launching an SME IPO.

SEBI Approval and Listing Fees

• Approval by SEBI: There shall be no charge for obtaining the approval of SEBI for the DRHP (Draft Red Herring Prospectus).
• In-principle Approval of Stock Exchanges: The cost of seeking in-principle approval from stock exchanges has also been waived off.

BSE SME IPO Listing Fees

Securities listed on the BSE SME platform are required to pay the following charges:

BSE SME IPO Listing Fees	Amount
Initial Processing Fee	INR 50,000 (One-time)
Refundable Deposit	1% of the IPO offer size
Bid Verification Charges	0.01% of the issue size with a minimum of INR 25,000, and a maximum of INR 50,00,000
Security Deposit	1% of the issue amount payable before the issue
Annual Listing Fee	INR 25,000 or 0.01% of the company’s higher post-issue share capital or full market capitalization (post-issue shares multiplied by the issue price)

The issuer company has to give the BSE an NOC (no objection certificate) for 1% of the deposit of the issue amount. The format for NOC is specified by the SEBI and the written application in the format specified by SEBI shall be submitted by the Lead Merchant Banker.

NSE SME IPO Listing Fees

Effective from 1 April 2012 the fees schedule is as below for SME IPO listing on NSE Emerge platform.

NSE SME IPO Listing Fees	Amount
Processing Fee	INR 25,000 (One-time)
Initial Listing Fee	INR 50,000, or 0.01% of issue size (whichever is higher)
Refundable Deposit	1% of the IPO offer size
Annual Listing Fee	The annual listing fee is between INR 10,000 and INR 45,000 or 0.02% of the full market capitalisation as of 31 March, whichever is higher, based on the paid-up capital of the company

1% of the issue size deposits can be claimed back provided a NOC is provided to the exchange.

Other Important SME IPO Costs

1. Lead Manager/Merchant Banker Fees: This is usually the biggest component in cost breakup of SME IPO. Lead Manager fees can range from 2% to 5% of the issue size.
2. Expenses of Marketing: These expenses can vary depending on the scope and scale of the marketing campaign.
3. Underwriting Expenses: These expenses are usually around 1% to 2% of the issue size.
4. Advisor Fees: These fees can range from 0.1% to 0.5% of the issue size.
5. Service Fees: These fees are charged by various intermediaries involved in the IPO process, such as legal advisors, auditors, and depositors.
6. Brokerage Fees: Stock brokers charge this to facilitate the process of IPO.

Cost of SME IPO Listing FAQs