How much money do you need (to be considered wealthy enough) to buy a stock at the IPO price?
I understand that you need to be very wealthy or a financial institution to buy a stock at the IPO price before it starts trading publicly at the first day opening price. But what I want to know is what is the minimum requirement of capital you need to have access to this ipo price. Or is it a minimum amount of shares you need to purchase to get the ipo price? I know there is a lock-up period.
It's likely not just a monetary requirement. Sure, they are going to favor the larger accounts, but my dad had a broker get him (for me - no I was not raised with a silver spoon - I paid for the shares) into Visa's IPO back in 2008, and I believe it was just the relationship he had with the broker and the fact that he has been there for several years.
Pre-IPOs, or private placements, would require an accredited investor status. On the other hand, getting shares of an IPO prior to it hitting an exchange is more likely to be correlated with being family members, management, top clients of broker dealers, etc.
How do you get in on an IPO in the primary market? (Originally Posted: 07/14/2010)
So my question is: How can I get buy shares of an IPO in the primary market? I know obviously that a lot of shares will go to underwriters, consultants, employees, and other insiders, but I'm just an individual investor who trades online.
Any luck for me? Or whats up?
you have a large wealth management account w/ (one of) the underwriter(s). other than that, its difficult to get in on a hot IPO as a regular retail investor.
Assuming you're in the US - yeah apart from what mezzmonkey mentionned above you're skrewed. There isn't such a thing as retail portion of an IPO in the US. Fyi, they do so in some European IPOs, involving marketing campaigns.
i wouldn't. institutional investors have so much more info that retailer investors - you're more likely to end up with a lot more dog shares
what Warp says about Europe is very true. it has much to do with the fact though that we never had a Glass Steagall Act or anything similar. therefore, in many cases the investment bank underwriting the deal was also a retail bank (e.g. Deutsche, RBS, BNP Paribas, SocGen, Unicredit) and they would obviously use their retail business to sell shares too. even in that case though its very hard to get shares. on the height of the dot com bubble i tried to get in a number of IPOs in Europe and I got shares allocated to me maybe 1 out of 20 times.
IPO underpricing can be a nice way to make money as a retail investor. especially bc you can flip the next day and pocket the 1st day's profit and nobody will hold you accountable at the underwriters simply bc you are way to small for them to notice. however, its just not a feasible strategy in practice for above mentioned reason. trust me, if it was that easy, we would all do it!
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