SMEs are a vital part of a developing country and play a significant role in any country’s economic growth. They are quickly becoming an alternative asset class and the best way of investment. However, with boosted globalization, there is a lot of competition in nearly all major industries. In order to maintain the competition while simultaneously promoting growth, it is important to have your business listing on BSE or NSE in SME IPO, especially for small businesses. They offer a new fund source and allow companies to list with comparatively lower compliance. So here, we will discuss the key benefits of listings.
● Improved Credibility and Visibility
Listing on BSE and NSE increases visibility for those companies that are not well recognized. These companies can now use the SME listing to present themselves and help them to deal with their competitor. They also have the chance to build more business prospects. This increases public awareness through media coverage and publicly accessible information, which leads to higher credibility for the company.
● Equity Dilution
You can dilute the equity by a minimum of 20% and get your equity funds. Here you need to remember that equity funds are not a liability, so you do not have a compulsion to service the equity funds. You just have to raise funds and can use them for business growth. Investors
will get a return through capital appreciation.
● Healthy Balance Sheet
It provides capital via equity funds, and there will be no cash outflow as you are not servicing it. The company can use the funds for development, diversification, acquisition, and loan repayment. This results in a complete balance sheet.
● No Cash Outflow
Listing entities can acquire the business just by equity swapping, and you can buy the company from equity. There will be no cash flow from the buyer entity.
● Use Equity AS Collateral
You have an option to use equity as collateral in case you don’t want to dilute your sales further. You can place it on the banks, NBFC and raise funds, keep in mind it will be a debt fund.
If you want to know more about SME IPO then you should attend Udyami Helpline Webinars on this topic which will give you full clarity and resolve all your doubts.