Investor Allocation in an IPO refers to the process of distributing shares in the company to various investors.
The IPO prospectus sets out how shares are allocated to different categories of investors, including institutional investors, retail investors, and qualified institutional buyers (QIBs). This allocation ensures an equitable distribution and is based on demand and the admission criteria set out in the prospectus.
Investor allocation in an IPO is critical to how the shares offered are distributed among the various investor groups. The allocation process is usually detailed in the IPO prospectus, indicating the specific percentages and any preferential treatment for certain groups based on demand.
Example: In an IPO, a company may allocate 50% of the shares to Qualified Institutional Buyers, 35% to retail investors, and 15% to Non-Institutional Investors as specified in the IPO prospectus.
Answered on
