(2) Retail Verses Institutional Split Of Shares
It is one of the most popular & key things to know about IPO stock allocation. Every IPO is typically divided into two tranches of demand: Institutional & Retail.
Institutional investors typically receive major parts of an IPO allocation process. Historically, institutional to retail split ratio is 90/10. However, retail percentage can be higher or lower depending on the concerned deal.
In India, stock exchange regulator like SEBI has made it mandatory for company to perform stock allocation as QIB (50%), HNI (15%), & Retail (35%) or QIB (60%), HNI (10%), & Retail (30%) of net issue. Here QIB stands for Qualified Institutional Bidder, & HNI stands for High Networth Individual.
[Read Also: 17 Basic Rules Of Investing Money In IPO Stocks]
(3) Media Coverage Can Affect IPO Demand
It is one of the most authentic & critical things to determine share distribution in IPO process. Media is known to have significant effect in popularizing products & services of any company. A good & well-known company can easily & quickly grab the attention of different sources of media.
Some of the popular sources of media that can attract the huge investors towards an IPO include television talk shows, stock analysts recommendations, advertisements, online coverage by reputed sites, magazines, newspapers, & many more.
An IPO issue of a well-known company that attracts a lot of media attention is often oversubscribed. It indicates a higher demand for IPO shares that far outweighs supply.
In such a scenario, your probability of receiving IPO stock allocation is reduced to higher extent.
Image Source: Shutterstock