If you’re a seasoned retail investor, you would know that IPO is short for initial public offering. It refers to when a private company proposes its first sale of stocks/shares to the public. If you’re reading this intently, perhaps an IPO you were interested in was oversubscribed (demand for subscriptions higher than shares on offer at the IPO).
Usually, if an IPO is oversubscribed, share allotment is done on a lottery basis. However, there is nothing to suggest you cannot improve your chances of being allocated shares even if an IPO is oversubscribed. Read on to find out how you can better your IPO allotment chances.
Before you begin work on the application for the IPO, it helps to check how the IPO has been received by the public and investor community so far. Updated data on IPO subscription status is typically available on the stock exchange website based on the bids it has received so far. Even before you make our application, it is advisable to check subscription levels for the first two days, at least, under the various sections, including the retail category.
If data suggests the IPO may be oversubscribed, firstly, stick to applying for a single lot. Opting for more than one lot doesn’t improve your chances if the IPO is oversubscribed.
Secondly, you have a higher chance of success if you make multiple applications through different Demat Accounts, which could belong to family or friends. It is important to note that these Demat accounts must each link to a separate PAN card.
Thirdly, when filling your application, choose the ‘cut-off price’ option indicating that you are willing to pay the price that the company finally decides after completion of the book-building process. It means you will have to pay as per the highest price band when making the application. The difference is refunded to you if the price discovered is lower.
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