Initial Public Offerings (IPOs) usually get a lot of interest from investors who want to buy shares at the set price before the company starts trading on the stock market. But because there are often more people wanting to invest than there are shares available, many investors find it hard to get allocated shares. If you`ve tried applying for an IPO and didn`t get any shares, you`re not the only one. In this guide, we`ll look at ways to improve your chances of getting IPO shares that can help you make the most of future IPO opportunities.
What is IPO Allotment?
Before we talk about tips, it`s important to know how the IPO allotment works. When a company goes public through an IPO, it sets a certain number of shares for sale. If more people want to buy than there are shares available, the company divides the shares among applicants. This is usually done either by giving shares in proportion to how much each person applied for or by randomly selecting applicants. So, not everyone who applies will get shares.
IPO allotment chance refers to the likelihood of an investor getting shares in the IPO after applying.
Why Is IPO Allotment Low?
When there is a lot of interest in a popular IPO, many people apply for the shares, which can cause the issue to be oversubscribed. Oversubscription means more people want to buy the shares than there are available, which makes it difficult for regular investors to get any shares allocated. Factors affecting IPO allotment include:
- Number of applicants
- Size of the IPO
- Investor category (retail, institutional, etc.)
- Application method
7 Proven Ways to Increase IPO Allotment Chance
1. Apply Through Multiple Demat Accounts
One common way is to use several Demat accounts. Since allotment is usually done per account, applying through more accounts can raise your chances. But make sure each account is in a different person`s or organization`s name, because applying multiple times from the same account is against the rules and might result in your application being rejected.
2. Apply for Lower Number of Shares
Even though it might feel strange, applying for the smallest possible number of shares can actually help you get some shares allocated. If too many people apply for big amounts, the shares get split up, and a lot of people end up with nothing. By asking for the least amount, you have a better chance of getting a small portion of the shares during the allotment process.
3. Submit Application Before Deadline
It`s important to submit your application on time. Some IPOs are handled on a first-come, first-served basis in specific categories or for company employees. Submitting your application early helps lower the chance of it being rejected or missing out on the IPO opportunity.
4. Use ASBA Facility for IPO Applications
ASBA lets your bank hold the money needed for the IPO application instead of taking it right away. This way, the application is more reliable and mistakes are fewer, which can help you get a better chance of being allotted shares.
Using ASBA through your bank`s net banking or mobile app is a seamless way to apply and track your IPO application.
5. Avoid Common Mistakes in IPO Application
Many investors lose allotment due to application errors such as:
- Incorrect Demat or PAN details
- Multiple applications from the same account
- Insufficient funds blocking
- Mismatch in signature or KYC
Double-check your application details before submitting to avoid rejection.
6. Apply via ASBA-Enabled Banks or Brokerage Platforms
Some banks and investment platforms are better equipped to help with IPO applications. Choosing well-known platforms that have a clear and error-free process can help you have a better chance of success.
Some platforms even provide alerts and reminders, ensuring you don`t miss the IPO window.
7. Participate in Employee or Anchor Investor Category
If you work for the company that issued the shares or have access to anchor investor categories, applying through those categories can increase your chances of getting allotted shares because companies usually set aside shares specifically for them.
Conclusion
To increase your chance of getting an IPO allotment, you need to use the right approach, act on time, and understand how the application process works. Applying with several valid accounts, using ASBA, avoiding mistakes while filling the form, and applying for smaller quantities can greatly boost your chances.
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