IPO fever in the markets feels as old as fever itself. But the newest fever is the SME IPOs. Funnycontrol shares a glossary of terms for those investors who fancy themselves as a Micro, Small and Medium Warren Buffet:
SME: Small and Medium Enterprises is the full form of this term which represents companies only. You may have also experienced trolls from your client’s finance team asking you to confirm if you are a registered MSME, because if not, they can delay your payments till the afterlife. But many men became highly insecure when asked to classify their company as Micro, Small or Medium and insisted they were all “Very Very LARGE ENTERPRISES!!!” and would happily share proof of the same as well. Only a fervent appeal that one does not wish to “Know your customer” this well prevented them from sending the “proof”.
SMEs can be classified based on size of turnover and market cap. For your knowledge and because I need something to joke about, here are the classifications:
Small: Turnover of Rs 50 crore or less. So basically the average betting amount in a high stakes match.
Medium: Turnover of Rs 250 crore or less. Or how much your parents expect in return for funding your foreign studies.
Mainboard Exchange: These are the exchanges wherein all the big companies get listed. Which means any love-cum-arranged marriages are arranged only between the children of the owners of these companies. That is, until one day your MSME hero self crosses the road like Govinda and a mainboard exchange owner’s daughter Neelam splashes mud on you when she drives past in her expensive Ambassador car (it was the ’80s guys). And thus begins an MSME and Mainboard exchange love story. And “Aap ke Aa jaane se” is the background theme for the company’s motivational video.
SME Exchange: This is akin to the dhaba where all the lower middle class Model School students from Jo Jeeta Wohi Sikandar hang out. This movie has an Ayesha Jhulka thinking her love IPO will be subscribed by her preferred FII but he instead relegates her to the SME friendzone exchange. But on the bright side, her IPO opens with “Pehla Nasha” playing in the background. The BSE SME Platform is called undramatically the BSE SME Platform. Now the NSE, on the other hand, has a flair for these things, so the platform is called the NSE Emerge Platform: For Emerging companies, Emerging economies and the Emerging secrets of the NSE like Mr Rig Yajur Suma, Kavi Narain and Citra Rag Heaven.
Minimum Number of Allottees: Minium number of investors to whom shares must be allocated. For the mainboard platform, it is 1,000 while for the Emerge platform it's only 50. That is roughly similar to the real value of Rs 1,000 in 2023 after raging inflation and even higher interest rates.
Minimum Application Size: The minimum lot size for investment. For the mainboard, it's Rs 10,000-15,000, but for the SME exchanges it is Rs 1,00,000. This is a clear indication to investors that any investment in the highly lucrative but highly risky SME IPO space should be done “aukaat anusar”.
So beware of how you go about investing in SME IPOs. Because even Rohit Sharma thought his team was destined for a mainboard IPO on the ICC events bourse. But instead found themselves relegated as an SME Ayesha Jhulka as the theme song of Jo Jeeta Wohi Sikandar plays with a photo of Mitchell Marsh’s feet on the World Cup.
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