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Who can get IPO ? How individuals are selected for IPO allotment?
"Who is eligible to receive IPO shares, and what's the process for selecting individuals for IPO allotment?"
"How do people get IPO shares, and what's the criteria for choosing who gets them? I want to know the basics.
I'm interested in understanding the process and eligibility requirements for obtaining IPO shares.
If anyone has insights or experiences to share, I'd appreciate the information."
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How individuals are selected for IPO
The criteria of selecting the individual to whom IPO is given depends on the investor category and the subscription level of the IPO. Subscription level is the ratio of the number of bids received to the number of shares offered. If the IPO is under-subscribed (less than 100%), all valid applicants will get full allotment. If the IPO is over-subscribed (more than 100%), the allotment will be done by a lottery system or proportionately, based on the investor category.
The investor categories are:
• Retail Individual Investors (RII): These are investors who apply for shares worth up to Rs 2 lakh. They are reserved 35% of the shares in the IPO. They are allotted at least one lot (minimum number of shares) per applicant, subject to availability. If there is an over-subscription, the remaining shares are allotted proportionately to the applicants who have bid for more than one lot.
• Non-Institutional Investors (NII): These are investors who apply for shares worth more than Rs 2 lakh. They are reserved 15% of the shares in the IPO. They are allotted shares proportionately to their bid amount, subject to availability. If there is an over-subscription, they may get less than their bid amount.
• Qualified Institutional Buyers (QIB): These are institutional investors such as banks, mutual funds, insurance companies, etc. They are reserved 50% of the shares in the IPO. They are allotted shares proportionately to their bid amount, subject to availability. If there is an over-subscription, they may get less than their bid amount.
You can check the IPO allotment status on the registrar’s website or on the stock exchange website, by entering your application number, PAN number, or Demat account number. You can also check the latest GMP (grey market premium) and listing date of the IPO on various websites.
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