IPO Advisory Services Overview — Initial Public Offering | Nainit Savla & Associates

IPO Advisory Services Overview

Q: What is the difference between a mainboard IPO and an SME IPO in India?

Mainboard IPO: listed on NSE/BSE main segment, SEBI ICDR Regulations, full SEBI DRHP review, post-issue paid-up capital above ₹25 crore (NSE) or ₹10 crore (BSE). SME IPO: listed on NSE Emerge or BSE SME, exchange-level review, post-issue capital ₹3 to ₹25 crore, lower thresholds, mandatory market maker, minimum application ₹1,00,000.

Q: What is a Book Building IPO and how is the price discovered?

Book building announces a price band; investors bid within the band during the subscription period. The lead banker determines the cut-off price based on demand. At least 75% reserved for QIBs, minimum 10% for NIIs, minimum 15% for retail investors.

Q: What is the lock-in period for promoters after an IPO?

Minimum promoter contribution (20% of post-issue capital) is locked in for 18 months. Excess promoter shareholding is locked in for 6 months. Pre-IPO placement investors face a separate 6-month lock-in from allotment date.

Q: What is an Offer for Sale (OFS) in an IPO?

An OFS allows existing shareholders to sell shares to the public — proceeds go to selling shareholders, not the company. Most IPOs combine a Fresh Issue (company capital raising) with an OFS (promoter/investor partial exit). Pre-IPO shareholders holding under 1 year typically cannot participate in OFS.

Q: How long does SEBI typically take to review a DRHP and issue observations?

SEBI must issue observations within 30 days of DRHP filing, but query rounds restart the clock. In practice, total SEBI review takes 60 to 120 days. SME IPO exchange review typically completes in 30 to 45 days.

An Initial Public Offering (IPO) is one of the most transformative events in a company's lifecycle — providing access to permanent equity capital, establishing a market valuation, enhancing brand credibility, and creating liquidity for promoters and early investors. It is also one of the most complex, multi-year undertakings that a company's management team will ever navigate — demanding simultaneous management of financial compliance, regulatory preparation, legal documentation, investor marketing, and corporate governance transformation, all while keeping the business running and growing. Our IPO advisory team provides end-to-end support from the decision to go public through to post-listing compliance.

IPO Readiness Assessment

Comprehensive pre-IPO diagnostic — evaluating the company's financial records, governance structure, compliance history, and management team against SEBI listing eligibility criteria to identify gaps and chart the IPO preparation roadmap.

Capital Structuring

Pre-IPO capital structure optimisation — equity, preference share, and debt rationalisation; promoter holding structuring; ESOP pool establishment; and pre-IPO placement strategy to maximise IPO pricing and minimise dilution.

DRHP Preparation

Preparation of the Draft Red Herring Prospectus — the primary regulatory document submitted to SEBI for review before a mainboard or SME IPO — covering all required disclosures under SEBI ICDR Regulations, 2018.

SME IPO Advisory

Specialist SME IPO advisory for companies listing on NSE Emerge or BSE SME — a lower-threshold, faster, and more cost-effective listing route for small and medium enterprises meeting the SME exchange eligibility criteria.

Tax Optimisation

Pre-IPO tax planning and structuring — addressing accumulated tax liabilities, optimising the tax structure for the IPO and promoter exit, managing ESOPs, and ensuring all outstanding tax demands are resolved before DRHP filing.

Post-Listing Compliance

Ongoing compliance management after listing — SEBI LODR quarterly and annual filings, board composition requirements, related party transaction approvals, insider trading policies, and continuous disclosure obligations.

The IPO Journey — Key Milestones

A mainboard IPO in India typically takes 18 to 36 months from the decision to list to the actual listing date — depending on the company's readiness and the market conditions at the intended listing window. The journey begins with an IPO readiness assessment, proceeds through a multi-year financial and governance clean-up phase, then enters the formal IPO process (appointment of merchant banker, DRHP preparation, SEBI filing and review, roadshow, and IPO opening). Post-listing, the company enters a permanent compliance regime under SEBI's Listing Obligations and Disclosure Requirements (LODR) Regulations.

SME IPOs on NSE Emerge or BSE SME can typically be completed in 6 to 12 months from the decision to list — with lower capital thresholds, simplified SEBI review (exchange-level rather than SEBI-level filing), and a less intensive roadshow process.

IPO Eligibility — Key SEBI Criteria for Mainboard Listing

Net tangible assets of at least ₹3 crore in each of the preceding 3 full years
Net worth of at least ₹1 crore in each of the preceding 3 full years
Pre-tax operating profit from core activities in at least 3 of the immediately preceding 5 years — or positive net worth exceeding ₹50 crore
Issue size not exceeding 5 times the pre-issue net worth of the company
At least 75% of net issue proceeds must be utilised for the stated objects
Promoters and promoter group must hold at least 20% of post-issue paid-up capital for 3 years (minimum promoter contribution)
At least 3 years of financial statements restated and audited under applicable accounting standards

Frequently Asked Questions

What is the difference between a mainboard IPO and an SME IPO in India?

A mainboard IPO is listed on the main segment of NSE (National Stock Exchange) or BSE (Bombay Stock Exchange) — subject to SEBI's full ICDR (Issue of Capital and Disclosure Requirements) Regulations, a mandatory SEBI review of the DRHP, and a more rigorous eligibility criteria (paid-up capital above ₹10 crore post-issue for BSE, and above ₹25 crore post-issue on NSE). An SME IPO is listed on NSE Emerge or BSE SME — with lower eligibility thresholds (post-issue paid-up capital between ₹3 crore and ₹25 crore), exchange-level (rather than SEBI-level) review of the prospectus, a mandatory market maker obligation, and a minimum application size of ₹1,00,000 rather than ₹15,000. SME IPOs are faster, cheaper, and more accessible for smaller companies — and a successful SME IPO can serve as a stepping stone to migration to the mainboard once the company meets mainboard eligibility criteria.

What is a Book Building IPO and how is the price discovered?

A book building IPO is a price discovery mechanism where the issue price is not fixed in advance — instead, the company announces a price band (floor price and cap price) and invites bids from investors at any price within the band during the IPO subscription period. The lead merchant banker and the company assess the demand across the price range (the "book") and determine the final issue price (the "cut-off price") at which the IPO is priced — typically at or near the cap of the price band if the IPO is well-subscribed. At least 75% of the net issue must be reserved for Qualified Institutional Buyers (QIBs) in a book building IPO, with a minimum of 10% for Non-Institutional Investors (NIIs) and at least 15% for Retail Individual Investors. Fixed price issues (where the price is determined before the issue opens) are still permitted but are rarely used for mainboard IPOs.

What is the lock-in period for promoters after an IPO?

Post-IPO lock-in restrictions apply to promoter shareholdings: (a) minimum promoter contribution (20% of post-issue paid-up capital) is locked in for 18 months from the date of allotment in the IPO; (b) promoter shareholding in excess of the minimum contribution is locked in for 6 months from the date of allotment. These lock-in provisions prevent promoters from immediately selling their pre-IPO shares after listing — protecting investors from promoter exit immediately after the IPO. Pre-IPO placement investors (those who participated in the last round of private placement before the IPO) are subject to a separate 6-month lock-in from the date of allotment. SEBI has progressively relaxed lock-in norms over time — the current requirements should be verified against the most recent ICDR Regulation amendments before IPO planning.

What is an Offer for Sale (OFS) in an IPO?

An Offer for Sale (OFS) is a component of an IPO where existing shareholders — typically promoters, pre-IPO investors, or PE/VC funds — sell a portion of their existing shares to the public, rather than the company issuing new shares. The proceeds of an OFS go directly to the selling shareholders, not to the company. A Fresh Issue component of the IPO raises new primary capital for the company. Most IPOs in India combine a Fresh Issue (for company-level capital raising) with an OFS (for promoter or investor partial exit). There are regulatory restrictions on the OFS — pre-IPO shareholders who have held shares for less than one year cannot typically include them in an OFS. The tax treatment for selling shareholders in an OFS is capital gains (long-term or short-term depending on the holding period from the original acquisition date).

How long does SEBI typically take to review a DRHP and issue observations?

Under SEBI's ICDR Regulations, SEBI is required to issue its observations letter (formerly called the "no-objection letter") on a mainboard DRHP within 30 days of filing — subject to SEBI's right to seek clarifications, additional information, or revised filings, which effectively restarts the clock. In practice, SEBI typically issues one or more rounds of queries — an Initial Review Letter (IRL) and subsequent query letters — before issuing its final observations. The total SEBI review period for a typical mainboard DRHP is 60 to 120 days, depending on the complexity of the disclosure issues and the speed of the company's responses. For SME IPOs, the exchange (NSE or BSE) reviews the draft prospectus — which is typically completed in 30 to 45 days.

Your IPO Journey Starts Here — Expert Advisory at Every Stage

End-to-end IPO advisory — readiness assessment, DRHP preparation, capital structuring, SME IPO, tax optimisation, and post-listing compliance for companies across India.

Talk to an Expert