IPO or Initial Public Offering refers to the process wherein a private corporation offers shares to the general public in a new stock issuance. By making the company public, it enables corporations to not only raise capital but also generate publicity.
Before we get started, let’s discuss what is Shareholding Quota or Shareholder’s Reservation Portion. When a subsidiary company releases its IPO, it reserves some shares that are made available as an offering under the shareholding quota of the parent company. Normally, depending on the size of the IPO, 5 to 15 percent of the shares are reserved for this purpose. Shareholder’s Quota is a reserved category and eligible investors need to apply under this category.
Here is the latest update on upcoming IPOs with shareholder quota. This list is tentative and IPO release may take time. Buying atleast one share of the parent company is worth to take advantage of shareholding quota in near term.
|IPO Name||Parent Company|
|SBI Card & UTI AMC||SBI|
|HDB Financial||HDFC Bank|
|HDB Erog & HDFC Credila||HDFC Ltd|
|Kotak AMC||Kotak Bank|
|PNB MetLife Insurance||PNB Bank|
|Equitas Small Finance Bank||Equitas Holdings Ltd|
|Bajaj Energy||Bajaj Hind Sugar Ltd|
|Reliance General Insurance||Reliance Capital|
|ICICI AMC||ICICI Bank|
|Axis AMC||Axis Bank|
|AB AMC||AB Capital|
|Life Insurance Co.||Exide Ltd|
|Tata Technology Ltd||Tata Motors|
Last updated on 31st Jan 2020
When a company keeps some stocks reserved under the shareholding quota, investors who hold at least one share also come under this quota and they can take advantage of this category. Usually, subscription under shareholding quota is much lower than other categories such as retail.
The second benefit is that when the IPO of a subsidiary company is announced, you can apply through 2 separate applications – one under retail category with a capping up to Rs. 2 Lakhs and the other under the shareholding category with a capping up to Rs 2 Lakhs. Applications under both categories will be considered valid. So in such a case, you have a better chance of allotment when the subscription goes above the required limit.
Lastly, companies usually offer special discounts under shareholding quota. In such a case, you will get some special benefits when you get allotment under the shareholding quota.
As per our analysis, the shareholders of the parent company, as on the cutoff date (when RHP is filed), are eligible to apply under the Shareholder’s quota. The parent company registrar also sends an email about the eligibility. To receive this communication, you must have a share/s in the parent company in your Demat account as on the cutoff date.
The answer is yes. if you hold 1 share of parent company also you will consider shareholders in parent company. The only requirement of shareholding quota is you must have shares in your Demat account on the record date. To participate in shareholding quota, one needs to apply in shareholding IPO category.
Yes, if you have parent company share in your demat account on record date. You can apply 2 IPO applications with same PAN card – One in Retail Category and other one in Shareholding Category. Both are valid applications. You can apply up to Rs 2 lakh worth of shares in each category.
As per current market trends, Maximum Shares under shareholder quota is up to Rs 2 lakhs. Please refer RHP document or IPO specific FAQ in case of any latest update in RHP.
DRHP Page Number 6/7: Individuals and HUFs who are the public equity shareholders of EHL, our Promoter, (excluding such persons who are not eligible to invest in the Offer under applicable laws) as on the date of the Red Herring Prospectus. The maximum Bid Amount under the EHL Shareholder Reservation Portion by an Eligible EHL Shareholder shall not exceed Rs 200,000 (net of EHL Shareholder Discount).
With that you add EHL shares in your portfolio to be eligible under shareholders quota.