How to increase IPO allotment chances


In 2020, many IPOs came one after the opposite, all applied with both hands, but many did not receive allocations. There are several IPOs to come in 2021. Is there any way to increase the possibility of IPO allocation? Nowadays as the situation is, companies are competing for listings. And everyone wants the IPO to be allocated to them. In this article, we will discuss the points that increase the probability of IPO allocation.

Before knowing the method of IPO allocation, we should know how much weight the IPO allocation has in different categories. 

1. The largest weightage in the IPO allocation is that of QIB, which has the right to subscribe to the 50% issue of the IPO. 

2. The retail investor weighs 35% - ie you and us, who apply for an IPO of less than Rs 2 lakh. 

3. Finally, comes NIB (Non-Institutional Investor), which can include HUF, NRI, Corporate, or anyone applying for an IPO of more than Rs 2 lakh. 

Furthermore, the main difference between these three is that no one is allowed to bid on the cut-off price except retail investors. Also, as far as the bid withdrawal is concerned, retail investors (NIBs) are allowed to withdraw the bid till the day of the allotment price, but the withdrawal of the bid by QBI after the closure of the IPO was banned by SEBI is.

How to increase IPO allocation chances


First method, HNI (high net worth individuals) or NIB (non-institutional bidder)

If you do not have a shortage of funds, and you apply for an IPO by investing more than 2 lakh rupees, then applying in the HNI category increases the scope of allocation compared to any other category. Now shares are found more or less. It also has some flaws, if the company gives some discounts then the HNI category is not eligible for it. We understand this by an example, ABC Company brings an IPO and gets over-subscribed 500 times in the HNI category, so this means that HNI will get a share for every 500 shares bid.


Second method, IPO application by maximum Demat account

In this, you will have to open Demat accounts in the name of all your family members and then apply for the retail investor category for 1-1 lots from all Demat accounts. In this way, the possibility of IPO allocation increases manifold when applying from different Demat accounts, whereas if you apply for multiple lots from the same Demat account, even if you have an IPO allotment, you only get one lot allotted.


Third method, reserve quota

In this, if the IPO of a company is about to come, then you must have at least a part of the parent company of that company already listed, as the reserved quota increases your IPO allocation by 90%. HDB Financial Services IPO is about to come, so you need to know about its parent company (HDFC Finance) and hold at least one of its shares in Demat.


Fourth method, keep the cut-off price maximum

Suppose the ABC company brings its IPO in the price band of 90-95, then the bid price should be kept at the maximum ie 95 when applying in the IPO. Because if you keep the price of your bid 93 and the allocation price goes to 94, in that case, your IPO subscription will be canceled.

So while applying for IPO, if possible, one should apply from the HNI category otherwise one should apply for 1-1 lot from different accounts in the retail category. It should be noted here that one should not apply through the Demat account of different company opened with the same PAN card in the same IPO. Because even in such a situation, your IPO subscription will be canceled.

PAN in Demat and PAN in Bank shoud be same



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