IPO Allotment Status: What Is Shareholder Quota And How It Can Improve Your Chances Of Share Allocation

IPO Allotment Status: The basis of allotment of five public issues is expected to be finalised on June 30, 2025. The public issues include mainboard issues, such as HDB Financial Services initial public offering (IPO) and Sambhv Steel Tubes IPO and SME issues, such as Rama Telecom IPO, Suntech Infra Solutions IPO and Supertech EV IPO. Amid what is being termed as 2025’s IPO tsunami, securing allotment is on every primary market investor’s wish list. While there’s no guaranteed way of getting allotment, applying under shareholder quota can increase your overall chances.

What Is Shareholder Quota In IPOs

Some companies offer primary market investors an option to apply under the shareholder’s quota. The shareholder’s quota refers to a portion of the offer size which an IPO-bound company reserves for investors who hold shares of its parent company. In some cases, investors are given a chance to apply for the public issue at a preferential price. On the company’s end, the quota helps the company to reward existing shareholders of the parent company. Typically, the shareholder quota comprises 5-15 per cent of the total offer size of the public issue.  

How To Apply Under Shareholder Quota

Both high net worth individuals and retail investors can apply for the shareholder quota if they are eligible. Additionally, eligible employees of the company can also apply under the shareholder quota. To become eligible to apply for the shareholder quota, investors need to hold a minimum of one share of the parent company on the day the IPO-bound company files the Red Herring Prospectus (RHP). Notably, the share has to be purchased before the RHP is filed and not on the day of the filing of the RHP.

Let us understand this with a recent example, HDB Financial Services reserved a portion of its offer size for shareholders of its parent company, HDFC Bank. Thus, shareholders who held even one share of HDFC Bank in their demat account on the date (June 20, 2025) when the RHP for HDB Financial Services IPO was filed, would be eligible to apply under the shareholder’s quota.

HDB Financial Services allocated nearly shares worth Rs 1,250 crore out of its total offer size under the shareholder quota, according to the RHP filed by the company. 

Typically, the retail portion of a public issue receives bids from more people, as the minimum amount of money required to invest in the retail category is the lowest. On the other hand, bidding in the shareholder’s category can potentially boost an investor’s chances of securing allotment. Additionally, some companies allow investors to place bids in both the retail and the shareholder category simultaneously. By placing bids in two categories the odds of securing allotment can be increased drastically.

Upcoming IPOs With Shareholder Quota

The Securities and Exchange Board of India (Sebi) is on an IPO-approving spree, and more and more companies are trying to raise money via the primary market amid a rally in the secondary market. Amid this IPO rush, three upcoming IPOs will have a reservation for shareholders of their parent companies. These include Hero FinCorp, the non-banking financial company (NBFC) arm of the Hero Group. Notably, investors who will hold shares of Hero MotoCorp in their demat account on the day the RHP for the public issue is filed will be eligible to apply under the shareholder quota. On the other hand investors who hold shares of Greaves Cotton, Brigade Enterprises and Tata Investment on the record day will be eligible to apply under the shareholder quota for Greaves Electric Mobility IPO, Brigade Hotel Ventures IPO and Tata Capital IPO.

While going through the DRHP is one way of making sure that a public issue has a shareholder quota, sometimes the reservation for shareholders is specified in the RHP instead. To conclude, applying under the shareholder quota can boost an investor’s chances of securing allotment. However, one should buy shares of companies in alignment with their overall investment goals and after conducting thorough research and not simply for availing shareholder quota.