What we do?

Embarking on an initial public offering (IPO) marks a defining milestone for any small or medium‐sized enterprise (SME). For many businesses, listing on a recognized stock exchange brings unparalleled opportunities for capital infusion, brand enhancement, and long‐term growth. However, the path to public markets is strewn with regulatory, financial, and logistical challenges that demand specialized expertise and seasoned guidance. At Capital Vridhi, we have crafted an end‐to‐end suite of SME IPO advisory services designed to transform complexity into clarity and risk into reward.

SME Capital Raising in the Primary Market

Comprehensive Support: Capital Vridhi Advisors offers end-to-end services to help SMEs raise capital through various methods, including public issues, debt instruments, and employee stock options, tailored to their growth needs.
Public Issues: We assist with SME IPOs, Main Board IPOs, Follow-on Public Offers (FPOs), and Rights Issues, enabling SMEs to access public markets efficiently.
Debt Instruments: Our expertise covers Non-Convertible Debentures (NCDs), NCD Placements, Private Placements of Convertible Instruments, and Qualified Institutional Placements (QIPs), offering flexible funding options.

ESOPs: We design and implement Employee Stock Option Plans to attract and retain talent, aligning employee interests with company growth.
Expert Team: Our team of MBAs and Chartered Accountants, with over a decade of capital market experience, ensures seamless execution and compliance.

Comprehensive Fund-Raising Services by Capital Vridhi Advisors in the Primary Market

I. Public Issues

Public issues allow companies to raise capital by offering shares to the public, enhancing visibility and liquidity. Capital Vridhi Advisors provides end-to-end support for the following public issue methods:

A. SME IPO (Small and Medium Enterprises Initial Public Offering)

  • Definition: An SME IPO enables small and medium-sized enterprises to raise capital by listing shares on dedicated platforms like NSE Emerge or BSE SME, which have relaxed regulatory requirements compared to main board IPOs.
  • Process:
    • Feasibility Analysis: We assess the SME’s financial health, market position, and readiness for listing.
    • DRHP Preparation: We draft and file the Draft Red Herring Prospectus (DRHP) with SEBI, ensuring compliance with regulations.
    • Investor Outreach: We leverage our network to connect with retail and institutional investors, organizing roadshows to boost subscription.
    • Listing Support: We manage the listing process, ensuring a smooth transition to public markets.
  • Benefits:
    • Access to capital for expansion, debt repayment, or working capital.
    • Enhanced brand credibility and visibility, as seen with the ₹1.8 trillion market cap of NSE Emerge in FY25.
    • Liquidity for existing shareholders.
  • Challenges:
    • Regulatory compliance gaps, such as incomplete financial disclosures.
    • Weak investor narratives or valuation disputes, which we address through strategic storytelling and financial modeling.
  • Role of Capital Vridhi Advisors:
    • We streamline compliance, craft compelling investor pitches, and optimize valuations, as demonstrated in our work with ABC Textiles, which achieved a 2.5x oversubscription.
    • In 2025, we guide SMEs through the vibrant IPO market, with 23 DRHPs filed in February 2025 alone.

B. Main Board IPO (Initial Public Offering)

  • Definition: A main board IPO involves listing shares on major exchanges like BSE or NSE, typically for larger, established companies.
  • Differences from SME IPO:
    • Stricter eligibility criteria, including higher revenue and profit thresholds.
    • Larger issue sizes and more extensive regulatory requirements.
  • Process:
    • Due Diligence: Comprehensive financial and operational audits to meet SEBI standards.
    • DRHP Filing: Preparation and submission of DRHP, followed by SEBI approval.
    • Marketing and Subscription: Investor roadshows and subscription management.
    • Listing: Final listing on BSE/NSE, with ongoing compliance support.
  • Benefits:
    • Access to a broader investor base, including Qualified Institutional Buyers (QIBs).
    • Significant capital for large-scale expansion, as evidenced by ₹1,630 billion raised through 80 main board IPOs in FY25 (KPMG).
    • Enhanced brand reputation and liquidity.
  • Challenges:
    • High compliance costs and extensive documentation.
    • Market volatility impacting subscription rates.
  • Role of Capital Vridhi Advisors:
    • We manage the entire IPO process, from due diligence to investor outreach, ensuring compliance and maximizing subscription.
    • Our network of SEBI-registered underwriters secures commitments from top-tier investors.

C. FPO (Follow-on Public Offer)

  • Definition: An FPO is when an already listed company issues additional shares to the public to raise further capital.
  • When Used: FPOs are used for expansion, debt repayment, or funding new projects.
  • Process:
    • Board Approval: Approval for issuing additional shares.
    • Regulatory Filings: Filing offer documents with SEBI and stock exchanges.
    • Subscription and Allotment: Managing investor subscriptions and share allotments.
  • Differences from IPO:
    • FPOs are for listed companies, requiring less extensive due diligence than IPOs.
    • Faster process due to existing market presence.
  • Benefits:
    • Raises capital without significant dilution of control.
    • Leverages existing market reputation to attract investors.
  • Challenges:
    • Dependent on market conditions and investor sentiment.
    • Potential for share price volatility post-FPO.
  • Role of Capital Vridhi Advisors:
    • We streamline the FPO process, ensuring compliance and effective investor communication.
    • Our expertise in market timing maximizes subscription rates, as seen in high-profile FPOs like the ₹18,000 crore offer by a major telecom company in 2025 (Moneycontrol).
  • 2025 Context: FPOs remain a key fundraising tool, with companies like JSW Cement planning significant offerings.

D. Rights Issues

  • Definition: Rights issues offer existing shareholders the right to purchase additional shares at a discounted price, proportional to their current holdings.
  • Purpose: To raise capital while maintaining shareholder ownership proportions.
  • Process:
    • Announcement: Company announces the rights issue, including ratio and price.
    • Entitlement: Shareholders receive rights entitlements, which can be subscribed, renounced, or traded.
    • Subscription: Shareholders apply through brokers or banks, typically via ASBA or UPI.
  • Advantages:
    • Cost-effective compared to public issues, saving on underwriting and advertising costs.
    • Protects existing shareholders from dilution.
  • Challenges:
    • Risk of low subscription if shareholders do not participate.
    • Requires careful pricing to ensure attractiveness.
  • Role of Capital Vridhi Advisors:
    • We assist in pricing, regulatory filings, and investor communication to ensure high subscription rates.
    • Our network facilitates the trading of rights entitlements, enhancing liquidity.
  • 2025 Context: Companies like EXICOM TELE-SYSTEMS LTD. and ASTEC LIFESCIENCES announced rights issues in July 2025.

II. Debt Instruments

Debt instruments provide SMEs & main board with non-dilutive funding options, ideal for short- to medium-term needs. Capital Vridhi Advisors offers expertise in the following:

A. Non-Convertible Debentures (NCDs)

  • Definition: NCDs are debt securities issued by companies to raise funds, offering fixed interest rates and principal repayment at maturity without conversion into equity.
  • Features:
    • Secured or unsecured, with maturities ranging from 1 to 20 years.
    • Listed on BSE/NSE for liquidity.
  • How Issued:
    • Public issues through a process similar to IPOs, involving SEBI approval and investor applications.
    • Private placements to select investors.
  • Advantages:
    • Provides steady income for investors and non-dilutive capital for companies.
    • High liquidity through stock exchange trading.
  • Risks:
    • Credit risk if the issuer defaults.
    • Interest rate risk affecting returns.
  • Role of Capital Vridhi Advisors:
    • We manage NCD issuance, from structuring to listing, ensuring competitive coupon rates and compliance.
    • Example of NBFCs like Bajaj Finance issuing NCDs at 8-9% in 2024-25.
  • 2025 Context: NCDs are popular among NBFCs, with companies like Muthoot Mercantile issuing NCDs in 2025.

B. NCD Placement

  • Definition: NCD placement involves issuing NCDs to a select group of investors, either publicly or privately.
  • Private vs. Public Placement:
    • Public Placement: Offered to the general public, requiring SEBI approval and listing.
    • Private Placement: Limited to 200 investors per financial year, with fewer regulatory requirements.
  • Regulatory Aspects:
    • Governed by SEBI (Issue and Listing of Debt Securities) Regulations, 2008.
    • Private placements require compliance with Section 42 of the Companies Act, 2013.
  • Role of Capital Vridhi Advisors:
    • We structure NCD placements to optimize terms and ensure compliance.
    • Our network connects SMEs & main board players with institutional investors for private placements.
  • 2025 Context: Private placements of NCDs are common, with companies like Signature Global raising ₹875 crore in 2025.

C. Private Placements (Convertible Instruments)

  • Definition: Private placements involve issuing convertible instruments like Compulsory Convertible Debentures (CCDs) to a select group of investors, which convert into equity after a specified period.
  • Types:
    • CCDs: Debt instruments that mandatorily convert into equity, popular among startups.
    • Convertible Preference Shares: Shares that can convert into equity under specific conditions.
  • Process:
    • Identify investors and issue a private placement offer letter.
    • Comply with Section 42 of the Companies Act and SEBI regulations.
    • Obtain shareholder approval for issuance.
  • Benefits:
    • Hybrid of debt and equity, delaying equity dilution.
    • Flexible for startups needing capital without immediate repayment.
  • Role of Capital Vridhi Advisors:
    • We design convertible instruments, manage regulatory filings, and connect SMEs with investors.
    • Our expertise ensures compliance with SEBI and RBI regulations.
  • 2025 Context: Convertible instruments are widely used by startups, with increasing adoption due to their flexibility.

D. Qualified Institutional Placements (QIPs)

  • Definition: QIPs allow listed companies to raise capital by issuing equity shares or convertible securities to Qualified Institutional Buyers (QIBs) like mutual funds and banks.
  • Eligibility:
    • Only listed companies can issue QIPs.
    • Minimum of two QIBs for issues under ₹250 crore, and five for larger issues.
  • Process:
    • Appoint a merchant banker to manage the issue.
    • Issue a placement document to QIBs, bypassing pre-issue SEBI filing.
    • Allocate shares post-subscription.
  • Benefits:
    • Faster and less regulated than IPOs or FPOs.
    • Minimal dilution of management control.
  • Role of Capital Vridhi Advisors:
    • We manage the QIP process, from structuring to investor outreach, leveraging our SEBI-registered underwriter network.
    • Our expertise ensures compliance with SEBI ICDR Regulations.
  • 2025 Context: QIPs raised ₹1.33 lakh crore in FY24-25, with companies like Adani Energy Solutions planning significant QIPs in 2025.

III. Employee Stock Option Plans (ESOPs)

  • Definition and Purpose: ESOPs grant employees the right to purchase company shares at a predetermined price after a vesting period, aligning their interests with company growth and aiding talent retention.
  • Structure:
    • Grant: Options are granted with a specified exercise price and vesting schedule.
    • Vesting Period: Typically 1-4 years, with a mandatory 12-month cliff in India.
    • Exercise: Employees purchase shares at the exercise price post-vesting.
  • Implementation Process:
    • Comply with the Companies Act, 2013, and SEBI guidelines for listed companies.
    • Obtain board and shareholder approval.
    • Issue valuation reports for accounting purposes.
  • Tax Implications:
    • Taxed as perquisites at exercise (difference between fair market value and exercise price).
    • Capital gains tax on share sale (short-term or long-term based on holding period).
    • DPIIT-recognized startups benefit from tax deferral until share sale.
  • Benefits:
    • Attracts and retains talent, especially in startups.
    • Enhances employee motivation and ownership.
  • Role of Capital Vridhi Advisors:
    • We design ESOP plans, ensure compliance, and advise on tax implications.
    • Our services include valuation, documentation, and employee communication.

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