Do Firm reservations effect the IPO investors?

Firm reservations are normal and often beneficial for the company; however carry certain drawbacks for public investors

• Reduced share availability for public investors
• Allotment chances drop when public float is small
• Oversubscription may look artificially high as the public float is smaller
• Higher volatility after listing as more shares are locked in reserved categories
• Subscription numbers may not reflect true demand
• In SME IPOs, market maker hold a large chunk of shares. They may influence early price movements also liquidity support can drop once their obligation period ends.