Maximizing IPO Allotments: The Power of the Shareholder Category for Retail Investors

The world of Initial Public Offerings (IPOs) is rapidly evolving, especially for retail investors eager to get a piece of the action. With a surge in IPOs and increased competition for shares, retail investors are turning their focus to the 'shareholder' category. This smart strategy allows them to apply in both retail and shareholder categories, effectively enhancing their chances of securing shares. In this article, we will look at current IPO trends, explain how the shareholder category operates, and spotlight some upcoming IPOs worth watching.

IPO Trend

Fiscal year 2025 is a landmark for IPO activity, with 32 mainline IPOs launched so far. Interest is surging, especially among non-institutional investors, led by retail investors who often encounter oversubscriptions in popular IPOs. This has led to a strategic shift toward IPOs with a shareholder allotment category.

The recent Bajaj Housing Finance IPO exemplifies this trend, showing high demand in the shareholder category. This strategy allows investors who own even a single share of a parent company to apply in two categories, doubling their chances of securing an allotment.

How Shareholder Category Works

The shareholder category benefits existing shareholders of a parent company when its subsidiaries go public by reserving a percentage of the IPO for them. For example, owning shares of Bajaj Finance allowed investors to apply in both the retail and shareholder categories for the Bajaj Housing Finance IPO, improving their chances of obtaining shares.

This mechanism rewards loyal investors and encourages commitment to the parent company. As more firms adopt this approach, the shareholder category is becoming crucial in IPOs. Retail investors should consider this to enhance their investment strategy.

Upcoming IPOs with Shareholder Category

There are several upcoming IPOs that will include a shareholder category, creating exciting opportunities for retail investors. Here are some noteworthy examples:

NTPC with NTPC Green Energy

NTPC plans to launch a ₹10,000 crore IPO for its renewable energy division, NTPC Green Energy. Importantly, 10% of the issue is set aside for NTPC shareholders, presenting a great opportunity for existing investors looking to tap into the growing renewable energy sector.

HDFC Bank with HDB Financial Services

HDB Financial Services, a subsidiary of HDFC Bank, is preparing for a ₹2,500 crore IPO. This offering includes an offer for sale (OFS) from current shareholders, allowing HDFC Bank shareholders a chance to participate in this lucrative offering.

HDFC Bank with HDFC Credila

While details are still emerging, HDFC Credila is planning a significant IPO focused on education loans. The inclusion of a shareholder category could offer HDFC Bank shareholders a favorable position to apply.

Hero MotoCorp with Ather Energy

Ather Energy, renowned for its innovative electric scooters, is targeting a ₹3,100 crore IPO. Moreover, it is expected to have a shareholder category, potentially benefiting shareholders of Hero MotoCorp by boosting their chances of allotment.

Hero MotoCorp with Hero Fincorp

Hero Fincorp has filed for a ₹3,688 crore IPO that will include both fresh issues and an OFS component. Existing shareholders of Hero MotoCorp will be able to apply under the shareholder category, further enhancing their allotment chances.

SJVN with SJVN Green Energy

SJVN Green Energy is preparing to file for an IPO in the near future. Although specific details are still pending, the inclusion of a shareholder category could attract interest from SJVN shareholders, improving their investment prospects.

More IPOs to Watch

Other companies are considering public offerings with shareholder categories. Coal India plans to go public with subsidiaries like Bharat Coking Coal and the Central Mine Planning & Design Institute, creating opportunities for retail investors to maximize allotments.

As the IPO landscape evolves, retail investors should stay alert to upcoming offerings with shareholder categories. By becoming shareholders in parent companies, they can enhance their chances of allotment in this competitive market.

Your Path Forward

Retail investors shifting towards the shareholder category in IPOs demonstrate their adaptability in a changing investment landscape. Understanding this category and staying informed about upcoming IPOs can enhance their chances of securing shares. As more companies adopt this approach, it becomes crucial in the IPO process, offering opportunities for both seasoned and new investors.

In an era of oversubscription and competition, leveraging the shareholder category is a game-changer for retail investors. Staying informed and strategically investing in parent companies increases their chances of success in the dynamic IPO environment.

Source: Moneycontrol

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