Why is SME IPO lot size so high?

Why is the IPO lot for WALPAR IPO is so high, i.e. 2000 shares @ 55.
I remember I read somwhere that SEBI has a rule that IPO lot should be around 15000 so that retail investors can participate too equally.

Is there any such rule at all ? All IPOs that I participated in last year were around 15000 only.

Yes SEBI has that mandate of 15000, but for mainboard IPOs.
Walpar IPO is coming up as SME IPO. For SME IPO requirements from company, like disclosures, financial parameters are less stringent. Idea is to make it easy for smaller company to come up with IPO.

However, to protect, retailers getting duped by such smaller company, SEBI has kept minimum participation amount for SME IPOs higher - around 1 lakh+. Idea being only Savvy investor will invest in it (Since ticket size is high) and they will do proper due diligence before investing.

Hope this helps.

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In case you are interested, it is Regulation 267 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (Page 155), that defines the minimum lot size for SME IPOs -

Application and minimum application value

267. (1) A person shall not make an application in the net offer category for a number of specified securities that exceeds the total number of specified securities offered to the public. Provided that the maximum application by non-institutional investors shall not exceed total number of specified securities offered in the issue less total number of specified securities offered in the issue to qualified institutional buyers.

(2) The minimum application size shall be one lakh rupees per application.

(3) The issuer shall invite applications in multiples of the minimum application amount, an illustration whereof is given in Part B of Schedule XIV.

(4) The minimum sum payable on application per specified security shall at least be twenty five percent of the issue price:

Provided that in case of an offer for sale, the full issue price for each specified security shall be payable on application.

Explanation: For the purpose of this regulation, “minimum application value” shall be with reference to the issue price of the specified securities and not with reference to the amount payable on application.

What is the difference between SME IPO and normal IPO ??

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Your valuable reply??

Not an exhaustive list but I have tried to summarize some of the major differences -

Criteria for Differentiation SME IPO Main Board IPO
Minimum IPO application Bid More than Rs.1,00,000 [1] Between Rs.10,000 - Rs.15,000 [2]
Minimum number of prospective
allottees required for successfully
getting allotment in the IPO
50 [3] 1000 [4]
Maximum Post-issue paid-up
capital for the issuer to be
eligible to offer an IPO
Upto Rs.25 Crores [5] No Upper Limit [6]
Underwriting requirement 100% underwritten [7] Underwriting not mandatory [8]
Market Making For a period of 3 years
from date of listing [9]
No such requirement [10]
Draft Offer Document SEBI doesn’t issue any
observations [11]
SEBI can specify changes
or issue observations [12]

* This list isn’t complete. Feel free to suggest more differences.

References -

All references are to the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018

[1] - Sub-clause (2) of Regulation 267 (Page 155)

[2] - Sub-clause (2) of Regulation 47 (Page 38)

[3] - Sub-clause (1) of Regulation 268 (Page 155)

[4] - Sub-clause (1) of Regulation 49 (Page 38)

[5] - Sub-clause (2) of Regulation 229 (Page 136)

[6] - No such limitation mentioned in Regulation 6 (Page 13)

[7] - Regulation 260 (Page 151)

[8] - Regulation 40 (Page 35)

[9] - Regulation 261 (Page 152)

[10] - No such requirement mentioned under PART VIII: Issuance Conditions and Procedure (Page 31)

[11] - Sub-clause (2) of Regulation 246 (Page 146)

[12] - Sub-clause (4) of Regulation 25 (Page 28)

Well both BSE/NSE have separate platform for SME which can be utilized by small companies to list.
Any company with post issue equity of less than 25 Crs can list on this separate platform.
Their, disclosures requirement and lot of financial parameter needed for listing are less stringent than normal exchange. ANd accordingly IPO parameters are also different
Idea is to make it easier for small companies to list and access capital market.
You can check out exchange website for more details

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@Prayag Thanks a lot for your pains taking,exhaustive and prompt valuable reply

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@Akash_Shah .Thanks for your reply