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IPO Share Allotment Process - Hindi | IPO में Shares कैसे Allot होते हैं ? | #15 Master Investor - YouTube
Channel: Asset Yogi
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Press the bell icon while subscribing
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so that you get notification of the latest finance video.
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Namaskar my name is Mukul,
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and welcome to another new video of the Master Investors Series.
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Friends, IRCTC's IPO came a few days ago.
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which was very popular, many people applied for it, Still many people do not get shares in it.
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So why does it happen, we want to buy an IPO
Still, the shares are not allotted.
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That's what we are going to know in this video.
what is IPO, Who are the players in it?
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What is the fixed price issue, what is the book building issue, we covered this in the last video.
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If you haven't seen that video then definitely watch it.
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In this video, we are going to understand the share allotment letter process in detail
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We will see the book price issue and the official price list issue
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How many types of investors are there?
How is the share allotted to them?
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And how these shares are allotted.
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And why are some people don't get allotted
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All these things we are going to learn in this video.
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Watch the video till the end.
Let's start.
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If you want to learn stock investing,
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You can follow our master investors series which is free.
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You will find the link to the playlist in the description below
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Apart from this, we get a common query.
If we want to invest or trade in shares
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So where should we open a Demat account for that?
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I recommend to you that you can open your account with any discount broker.
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Where brokerage charges are very less.
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And the delivery charges are almost zero.
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You will get Latest Offers, Recommendation and Links
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Where should you open a Demat account?
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You will find them in the description below.
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Apart from this, if you have any stock market-related queries.
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If you need initial hand holding
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then you can contact us on our Whatsapp number on 9292924848
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Also, you can contact us on our email id
Which you will find on the screen.
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Let us first know the category of investors in an IPO.
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Retail individual investors are first.
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Who are small investors like you and me.
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That is, those who can invest less than ₹2,00,000
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So any retail investor can invest a maximum of ₹ 2,00,000 in an IPO.
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And if anyone invests above two lakhs,
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So it comes under the non Institutional category.
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So here we write more than ₹ 2,00,000.
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And what kind of investors can be in it.
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High net Worth Individuals,
If an individual invests more than ₹ 2,00,000
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So he comes under the HNI and NII (non-institutional investors) category.
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Second, are Hindu Undivided Families.
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Third, are corporates
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Apart from this, there is a third type of category qualified institutional buyers
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which are the enormous types of investors.
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Like Funds and banks, the 3rd category is Qualified Institutional Buyers who are big buyers,
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It includes Banks, commercial banks, Mutual Funds foreign institutional investors
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which we call FII in short, insurance funds, pension funds, provident funds,
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Venture capital firms, QIBs invest a lot of money.
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Whenever a company goes to an institution,
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they say if you can invest a lot of money with us.
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So we can make you anchor investors
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And we can give you preferential treatment
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That is, we will do your allotment on our own.
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So we call such an investor an Anchor Investor.
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and other types of QIBs come into this
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What are the minimum requirements of anchor investors?
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I'll talk about this for a while
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The fourth category is the reserved category.
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If any company comes with its IPO, then it would like to give benefits to its employees.
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Or would like to give benefits to its existing shareholders.
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So to the employees or shareholders of the group company,
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or a promoter company or a big company is coming with its small company's IPO.
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So to those shareholders, preferential treatment can be given
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A separate allotment reservation is kept for them.
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So Broadly these are 4 types of investors
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And we understand what kind of reservation they have.
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In Qualified Institutional Investors,
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the sub-category I discussed under QIBs is anchor investors.
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Here anchor investors have to pay a minimum amount of ₹10 Crore.
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Otherwise, he cannot become an anchor investor.
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And the maximum 60% of the QIB allotment,
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60% of the maximum can go to the anchor investor.
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for example, If total QIB had a reservation of Rs5 Crore
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What can be the Maximum Anchor Investor?
Could be Rs3 Crore
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further,⅓ of the anchors have to pay to Domestic Mutual Funds.
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Then how much will be 1/3 of 3 crores.
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One crore shares have to be given to the minimum domestic mutual fund
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and 2/3 of the rest, the remaining two crores shares will go to the anchor Institutions.
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So let's say total anchor institution is 2 or 3 institutions
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They will have to allot two crore shares to the company
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And the preferential treatment has to be given.
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and the second is other QIBs
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apart from these three crore shares, the remaining two crore shares are left.
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They will be divided into the rest of the qualified institutions.
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Now let's talk about the important conditions
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The minimum subscription has to be 90% to any company
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When any company
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Let's say they want to allot shares of ₹1 Crore
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And less than 9 crore shares are allotted in it.
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So that IPO gets scrubbed
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All money of the people has to be returned
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So there should be a minimum 9 crore share allotment.
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now let's talk about the minimum application amount
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See we talked in the previous video also,
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it is not that you can buy 1 or 2 shares of any company
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Every company says we want a minimum amount
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So that every investor should invest here.
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This means we only want serious people
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It is also the SEBI guidelines that
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you should invest the minimum application amount between 10,000 to 15,000
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for example, a company says that we have kept the value of a share at Rs 250
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We have kept the lot size of 50 shares
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So you have to buy a minimum 50 share of rupees 250
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If you want to invest in our IPO
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Or in its multiples
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You can buy 50 shares, 100 shares, 150 shares in this way
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Now let us talk about the minimum bid amount
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So we have already discussed that retail investors
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can invest a maximum of Rs 2,00,000
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If you invest more than two lakhs then you fall in as a non-institutional investor.
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Or you come in the form of QIB.
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Apart from this, any company employee can buy a maximum of shares of Rs 5,00,000 only.
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So you need to know this bid amount as well.
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Apart from this, in the last video, we talked about the book building issue.
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So there we discussion about cap price
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Their price discovery takes place.
I will talk about this in more detail.
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The cap price is the highest, where you can bid
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But only retail investors can do
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Qualified institutional buyers and
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The non-institutional investor cannot be bid on cap price
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Can bid only on its lower price.
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Now, who can revise the bid?
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A retail investor can revise his bid and can close.
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But this option is not available with QIB and NII.
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There are also certain minimum requirements for promoter contribution.
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the promoter should have a minimum of 20% of post-issue Capital
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For example, the total value of ABCD toys becomes 10 thousand crores after issuing
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That is, after the issue of shares
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so promoters, that is a couple of husband and wife.
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The value of their shares should also be at least two thousand crores
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That is, their capital should be two thousand crores.
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And they will have to maintain the capital of the minimum of 20% for at least 3
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years after allotment.
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So any company have to be met these important conditions for an IPO
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Now let us talk about what is the Actual Share Allotment Process.
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Let us first talk about a fixed price issue
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For example, If a company is bringing the issue size of 2500 cr.
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And they would say that we will issue 10 crore shares here.
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We have fixed the issue price for this
of 250 rs per share
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Note that this is a fixed price issue,
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So here the share price has been fixed.
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It has been said here that if you want to take this share for Rs 250, then take it.
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If you don't want to take it, then don't.
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take it or leave it applies here.
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Let say here the lot size is 50 shares so here the minimum investment amount will be Rs 12,500
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Which comes within the limits of 10,000 and 15,000
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Now here is how the allotment reservation is kept here
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The retail investor has to pay a minimum of 50%.
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50% is the minimum, so let say this company says we will give 60% to retail investors here
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And we kept 40% for the rest of HNI, Corporate Institutions, or reserved category.
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keep in mind in allotment reservation, minimum of 50% is kept within the fixed price issue
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Fixed price issues are not so common.
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It is promoted more in India, SEBI also say
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And NSE and BSE also say
-"Bring book building issue"
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and why do they say ?
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In this, price discovery is done from the market.
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When a merchant banker conducts an evaluation
So that evaluation may not be that correct.
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Because it has not been tested in the market
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Within the book building issue, it is tested in the market
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and price discovery is also done,
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Let's see how it goes
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Let's assume the issue size will be from Rs 2,250 crores to Rs 2,500 crores.
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because we don't know the exact price
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So we don't even know for sure how much money they will raise.
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The number of shares has been kept the same, Rs 10 crores
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And floor price has been kept here ₹225
And the cap price has been kept here at ₹250.
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Floor price whenever a person will put a minimum amount
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So he has to invest a minimum amount of ₹ 225
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And the maximum he can put is Rs 250,
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Let's say the final price is whatever the company decides
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If the price comes less than that, then the shares may not be allotted.
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That's why you have to bid a good price here.
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It is not that you put any value from 0 to 100 of a floor price and cap price
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The maximum difference can be 20% between floor price or cap price.
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That is, the floor price can be 20% more than the cap price.
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In our example, it is less than 10%
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So this is ok
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Suppose we keep the lot size in it of 50 shares.
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The minimum investment is made here from 11,250 to 12,500.
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Depending on who has bit it with how much price.
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So when you're bidding here, you will bid a lot.
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That I want to buy this many lot at this price
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Let's say I want to buy it for 245 rupees.
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So the more you bid near the cap price as a retail investor, the more profit you have.
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Because the chances of your allotment increase the same way.
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What is the allotment quota reservation inside the book building issue?
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Minimum 35% is kept for retail,
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for Non-institutional Minimum 15%
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and minimum 50% for Qualified Institutional Buyer.
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Now let's see in our example let say
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Merchant banker decides the final price, offer price in the book building issue
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with issuer, decided that we have kept the final offer price at ₹240.
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Suppose you had bid 245, so the final 240 has come.
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So you will definitely get the shares, and that too you will get at 240 amount
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but suppose the price you had bid was 235
So in that case your allotment will not be done
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If the issue is too much oversubscribing
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But if the issue is not oversubscribed, then your allotment may complete
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How the company decides the price of ₹ 240 ?
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The company sees the shares which will be sold up to 240.
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Let's say the number of our shares were sold for 250
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crores of our shares were sold at 245.
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And by 240 all our shares will be sold.
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So in this way, they decided on 240 as a cutoff.
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And says 240 is our final offer price.
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And if you bid a lot on this, so whatever is the final offer price
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you have to buy it.
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In our case, the lot size was 50 shares.
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So here our minimum investment becomes ₹ 12,000.
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So you will be allotted multiple shares of 12,000.
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Suppose, for example, an allotment Quota/ reservation of 40% is kept for retail
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15% for non-institutional investors
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So for retail 4cr shares,
There were Rs 10 crores.
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It's 40% is 4 Cr shares,
15% will 1.5 Cr shares
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And for QIB let say 45%
That is, Rs 4.5 crore shares have been allotted.
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Let us now understand how these shares will be allotted in different scenarios.
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Suppose the subscription becomes less than 90%
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That is if there is a subscription of less than Rs 9 crores,
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then in this case there will be no allotment
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IPO will be scrapped.
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There will be 100% allotment in 90% to 100% cases.
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And how will it be? Allotment will be done to all the investors.
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Because the company can give shares to those who have applied.
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Then everyone will get the allotment, Suppose the subscription goes up a bit
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Let say it becomes one and a half times,
There is a demand for 15 crore shares.
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That is, if the subscription becomes 1.5 times, then what happens in such a case
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One lot is given to all the retail investor
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understand carefully here so all the retail investors will be given one lot to each
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And the rest of the retailer's reservation
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It will be distributed on a proportionate basis.
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The one who has applied more will get more.
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The one who has applied less will get a little less.
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And non-institutional investors and QIBs will get proportionate.
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Let say If someone has applied 15 lots then he will get 10 lot
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Because there is a ratio of 1.5 times
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So we will divide that by 1.5
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If he has done 15 lots, you would divide 15 by 1.5.
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So 10 slots will be allotted to him,
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But suppose the subscription goes high,
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Which we saw in the IRCTC case
So how is the allotment done in that case?
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Let's say oversubscription happens multiple times.
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In our case, the subscription of Hundred Crore Shares comes.
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That is, a 10 times subscription comes.
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so what will happen in such a case
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First of all, only one lot can be found in the retail category.
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There are so many subscriptions that all the investors can get only one lot.
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And first of all, not all investors will get it.
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Because it is 10 times,
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Even among retail investors,
I am assuming that a 10x allotment is attaining.
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So here the lucky draw will be done, who will get that
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It is decided by a computerized lucky draw.
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and the rest of the NICs
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i.e. non Institutional Investors and qualified institutional buyers
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Their allotment will be proportionate
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That is, if someone has applied for 10 lots, then he will get one lot
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If someone has applied for 100 lots, he will get 10.
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I hope this allotment process is cleared to you now
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If you liked this video then please like and share it.
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If you have any suggestions related to this video, you are related to this channel.
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So see you in the next such information video
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Till then keep learning keep earning and be happy as always
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