Answer
The cut-off price IPO application means you agree to pay the final price that is decided after the book-building process. This is the best way for retail investors to increase their chances of getting an allotment in case of oversubscription.
Why Should Retail Investors Bid at Cut-Off?
- Higher Chance of Getting Shares: The company often gives priority to investors who have bid at the cut-off price (which is the actual final share price) in case of oversubscription.
- No Need to Guess the Price: You don’t have to worry about predicting the final price. You commit to buying the shares at whatever final price is set within the band. This prevents your application from being rejected if you bid too low.
Important Note: This “cut-off” option is only available to individual retail investors. This rule helps keep the share allocation process fair and transparent.