The more the issue is oversubscribed the higher the interest cost per share. "Investors can make sufficient profits even if they are allotted 1/10th of the total amount invested and the scrip gets listed at a premium," said R Ramnath, vice-president (Investment Banking), Srei Capital Markets.
Reji Jacob of JRG Securities, which plans to enter IPO financing, said this type of financing was more common in the smaller cities rather than big cities like Mumbai.
The arrangement works as follows: The investor gets into a tripartite agreement with her/his depository participant (DP, which is normally the local broking firm
