The SME IPO Handbook · Chapter 10 of 12
Risks Specific to SME IPOs
Business risks
Dependence on a few customers, thin margins, limited access to finance and weak governance.
Market risks
Low liquidity, wide spreads, big moves on small volumes, and in the worst cases manipulation by operators.
Regulatory attention
SEBI and the exchanges have tightened scrutiny of SME issues and have warned about pump-and-dump schemes. Treat unsolicited tips as warnings.
Position sizing
Never apply with money you cannot afford to lose. Treat an SME application as a high-risk bet and size it accordingly.
Key takeaways
- Liquidity risk is the biggest SME risk.
- Ignore unsolicited tips and social-media hype.
- Keep SME positions small.
- Do not borrow to apply.