SME IPO Investments: Let’s Do Something About This ft. Makia Capital

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Published on: Dec 2, 2024

Taking a company public is one of the most significant milestones in its journey. It’s not just about raising capital—it’s about establishing credibility, expanding market presence, and fueling growth.

In 2023 alone, Indian companies raised over ₹75,000 crore through IPOs, a testament to the booming investor appetite and the robust performance of public markets. From small enterprises looking to scale rapidly to established firms aiming to diversify their capital base, an IPO can unlock unparalleled opportunities.

However, transitioning from a private company to a publicly listed entity is a major shift that requires strategic planning and execution. Here’s what you need to know about preparing for this transformative journey:

Why Going Public is a Paradigm Shift?

When a private company decides to go public, it steps into a new realm of opportunities and responsibilities. Here are key aspects to consider:

  1. Managing Investor Expectations
    • Public companies must meet the initial and ongoing expectations of external investors.
  2. Building Credibility and Structure
    • Companies need to establish an organisational structure, internal processes, and a capable team to ensure investor confidence and efficient management of capital market activities.
  3. Complying with Regulations
    • Enhanced scrutiny, compliance with regulatory obligations, and regular reporting are integral to being publicly listed.


To ensure success, it is essential to assess your readiness for the public markets and address any gaps before moving forward.

How to Get Started with Your Listing Journey?

  1. Understand Capital Markets and the IPO Process
    • Familiarise yourself with the nuances of capital markets and the steps involved in raising funds through an IPO.
  2. Evaluate the IPO Option
    • Compare the benefits and challenges of an IPO with other fundraising options to determine the best fit for your business.
  3. Assess Your Readiness
    • Conduct a realistic assessment of your company’s preparedness for public listing, including operational, financial, and compliance aspects.
  4. Strengthen Internal Systems
    • Upgrade your internal processes, governance, and systems to meet the requirements of a publicly listed entity.
  5. Define Your Project and Fundraising Goals
    • Clearly articulate your capital needs and how the funds will support your growth objectives.


What Does It Take to Succeed? Essential Steps to Navigate the IPO Process

Step 1: Evaluate IPO Readiness

Before launching an IPO, it’s critical to assess your business’s readiness across key areas:

  • Financials: Are your books audit-ready and compliant with SEBI regulations?
  • Scalability: Do you have the infrastructure to support rapid growth post-IPO?
  • Governance: Are you equipped with a strong board of directors and ethical compliance practices?

Step 2: Assemble Your Advisory Team

IPO execution is a multi-stakeholder process. Partner with experts to ensure a seamless transition from private to public:

  • IPO Advisors: Handle end-to-end planning and documentation.
  • Legal Experts: Navigate complex regulatory requirements.
  • Investment Bankers: Assist with underwriting and placement strategies.

Step 3: Develop a Robust Growth Story

Investors are not just buying shares—they’re buying your company’s vision. A compelling growth story, backed by financial metrics and market insights, is critical. Include:

  • Revenue and profit projections.
  • Unique value propositions (UVP).
  • Long-term industry outlook.


Step 4: Prepare the Draft Red Herring Prospectus (DRHP)

The DRHP is your business’s blueprint for potential investors. It includes:

  • Financial statements.
  • Growth strategy and risks.
  • Details about the IPO, including the price band and equity structure.


Step 5: Build Market Buzz

A successful IPO is as much about marketing as it is about compliance. Plan your outreach strategy to include:

  • Roadshows: Meet institutional and retail investors.
  • Digital Campaigns: Use LinkedIn, Google Ads, and other platforms to target a broader audience.


Step 6: Launch and List

After regulatory approvals, you’re ready to launch the IPO. Key steps include:

  1. Finalising the price band.
  2. Opening the subscription window.
  3. Ensuring liquidity through coordination with underwriters and market makers.

Conclusion

An IPO is more than a fundraising exercise—it’s a transformative opportunity to redefine your company’s future. Whether you’re a startup or a mid-market firm, careful planning and expert guidance can make all the difference. With the right strategy, you can navigate the complexities of going public and maximise your success.

Ready to go public? Contact us for end-to-end IPO advisory services today!

Want to Know More About Makia? Let’s connect!

Makia Capital is India’s leading IPO Consultant and VC Fund. Let’s Connect.

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