SBI Cards IPO: This one's for high net-worth individuals, but has its risks

Listing gains may be limited, if the issue is subscribed multiple times

When an initial public offering (IPO) like that of SBI Cards, which is expected to evoke a good response, takes place, expectations of listing day gains run high. High net worth individuals (HNIs) often borrow money from non-banking financial companies (NBFCs) to apply for such IPOs. Such leveraged bets, however, carry high risks that HNIs need to be cognizant of.

If a person’s application is for more than Rs 2 lakh, he falls in the HNI category. Allotments in this category happen as follows: If the HNI portion gets oversubscribed x times, then each HNI is allotted 1/x of what he