Small and Medium Enterprises (SMEs) can raise equity capital through public markets by listing on SME platforms of recognized stock exchanges such as NSE Emerge and BSE SME. An SME IPO (Initial Public Offering) allows companies to issue shares to the public for the first time, while an FPO (Follow-on Public Offering) is issued by already listed SMEs to raise additional funds.

Eligibility for SME IPO/FPO requires the company to be incorporated under the Companies Act, have a minimum post-issue paid-up capital, positive net worth, and profitability track record as per SEBI guidelines. The company must also appoint a SEBI-registered Merchant Banker to manage the issue.

The process involves due diligence, preparation of the Draft Prospectus, obtaining SEBI/stock exchange approvals, marketing the issue, allotment of shares, and subsequent listing. Post-listing, the company must comply with continuous disclosure and corporate governance requirements.

SME IPO/FPO helps businesses access long-term capital, expand operations, reduce dependence on debt, and build brand reputation. It also provides liquidity for existing shareholders.