Applying for an IPO? Here is how you can increase your allotment chances

• Individuals (retail investors) cannot apply in the high networth categories to increase their chances of allotment.
• Applying in an IPO through different brokers will result in the complete rejection of the application.
• The only way to increase your chances is to apply via all your family members' accounts.
  

It is the season of initial public offerings or IPOs. Six firms raised ₹4,269 crore in August from the public market and the calendar in September is going to be busy too with five companies looking to launch their respective IPOs in the month.

The allocation of shares in an Initial Public Offering (IPO) is primarily determined by an automated system. In the event of oversubscription, most retail investors get fewer shares than they have bid for due to high demand. We take a look at things you may do to increase your chances of allotment and also what you should not do.

Market experts say that applying from multiple demat accounts can be a ground for rejection. “To navigate through this, investors can put one lot in the name of each of their family members, which will help them get optimum allocation in the event of oversubscription. Also, an investor should apply once, multiple applications are liable to be rejected,” says Mahavir Lunawat, Managing Director, Pantomath Capital Advisors, a mid-market investment bank.

Let us take a look at some instances when your IPO application may be rejected.

You cannot apply in HNI category

Individuals cannot apply in the HNI category to increase their chances of allotment. “If there are multiple applications from a single PAN, application will be upfront rejected,” says Anant Ladha, founder, Invest Aaj For Kal, a financial advisory firm.

Moreover, if a retail investor applies for more than ₹2 lakh worth of shares in an IPO, the offer is automatically categorised as an high networth individual (HNI).

You cannot apply for an IPO through different brokers

Applying in an IPO through different brokers will result in the complete rejection of the application. If an investor submits multiple applications for an IPO using the same name, Demat account, or PAN number, all of these applications will be declined. “The rules are simple - one application, one PAN. Multiple applications in any combination will be rejected, be it from the same broker or different ones,” says Ladha.

The only way to navigate through this is to apply under each member of the family's name. However, for this, all eligible family members need to have a PAN number and a demat account.

You cannot make several applications thought a single UPI account

While the transaction limit for IPO applications with UPI as payment has been increased to ₹5 lakh, only one application is allowed through UPI as a payment gateway.

Application Supported by Blocked Amount (ASBA) accounts are required for numerous applications. Only select banks like SBI, Bank of Baroda, RBL, and Axis, currently offer this for up to five applications, each with their own demat and PAN.

Thus, the only way to increase your chances is to apply via all your family members' accounts. Apart from that, there is no way you can increase chances of allotment.