Wed Sep 18 01:00:05 UTC 2024: ## IPO Frenzy: Luck of the Draw as Over-subscription Makes Allotment a Gamble

**Mumbai, India -** The recent initial public offering (IPO) frenzy has lured investors, but despite the enthusiasm, securing shares remains a game of chance due to heavy oversubscription. While strategies like using multiple demat accounts and shareholder quotas can slightly improve allotment chances, the odds still remain stacked against most applicants.

Bajaj Housing’s recent blockbuster IPO, oversubscribed more than 60 times, saw prices double, but only a fortunate few managed to secure shares. Social media was flooded with memes reflecting the struggle to get an allotment, highlighting the competitive landscape.

**Boosting Your Chances:**

* **Multiple Demat Accounts:** Applying through multiple PAN-linked demat accounts can increase your chances. Instead of applying for the entire amount through one account, splitting it across several accounts, each linked to a unique PAN, gives you more “lottery tickets.” However, using multiple accounts linked to the same PAN will lead to rejection.
* **Shareholder Quota:** Holding shares in the parent company of the IPO can grant you access to a reserved allotment. For example, Bajaj Housing set aside 7.62% for shareholders of Bajaj Finserv and Bajaj Finance.
* **Capitalize on the Strategy:** Aadesh Jain, a freelancer from Chennai, successfully utilized this strategy by buying Bajaj Finserv shares across 14 demat accounts held by friends and family, securing allotments for 11 applications.

**The Deception of Oversubscription:**

While the exchange reports oversubscription based on value, allotments are determined by the number of applicants. This can be misleading, as a larger value doesn’t necessarily mean better odds.

For instance, in the Bajaj Housing IPO, the big-HNI category (applications of over ₹10 lakh) was oversubscribed 50 times, while the small-HNI category (₹2-10 lakh) was subscribed 32 times. However, the value-based subscription numbers can be misleading.

**The Lottery System:**

Once an IPO is oversubscribed, the allotment process essentially becomes a lottery, with all applicants treated equally. This means that even large applications do not guarantee an allotment.

**Key Mistakes to Avoid:**

* Submitting multiple applications from the same PAN-linked demat account.
* Mismatched names on the demat account and bank account.
* Applying using a family member’s account or UPI ID.

**Expert Advice:**

Mohit Mehra, vice president of primary markets and payments at Zerodha, emphasizes the importance of checking the basis of allotment released by the registrar to understand the true odds of securing an allotment.

The IPO frenzy highlights the need for investors to be aware of the realities of oversubscription and the lottery system, while also avoiding common mistakes to improve their chances of success.

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