The Analysts of Taking Stock with Kalilah Reynolds say that the small allotments for edutech company, One on One’s IPO were to be expected given the size of the offer and the number of subscriptions.

One on One was only offering 380 million shares in its Initial Public Offer, which was eight times oversubscribed, raking in $3 billion worth of subscriptions. 

Lead broker Sagicor Investments announced last week that applicants to the general public pool will receive the first 5000 shares they applied for and 2.23% of the remainder.

Many investors took to social media to express their displeasure with what they called a “meagre” allotment.

However, Assistant General Manager of Trading and Treasury at JMMB, Greig Lindo said that small allotments are to be expected from offers of this size that generate such massive interest.

“If it’s a hot IPO and you get enough applications, you’re not gonna escape the low allotment,” he said. He added, however, that it highlights that the retail market is really strong and retail investors are always looking to deploy capital into offers.

Lindo said that One on One’s allotment will also teach investors an important lesson as it relates to participating in smaller IPOs. He said investors have to take into account how many shares they will be allotted when they’re applying. 

“You do have people that apply for IPOs and in order to increase their chances of a higher allotment, they put in 2-3 times what they may really want. But guess what, if enough people do that you’re going to skew your allotment lower,” he said.

“I understand that it’s unfortunate and people are disappointed but that’s just the nature of how the market works,” he added.

CEO of Profit Jumpstarter, Keisha Bailey echoed similar sentiments, saying that sometimes investors learn hard lessons. 

She agreed that it can be used as a teaching moment to some investors about their strategy.

“It’s also good training that the quick flip of money is not sustainable. So, if people are looking to IPOs as a strategy to build wealth then that might not be a good one,” she said.

But, good news…

On the bright side, the Analysts said that the low allotment will drive up the demand for the company’s shares once they do list on the Junior Market of the Jamaica Stock Exchange. This will in turn drive up the stock’s price, proving profitable to some investors.

Shares to the public were priced at J$1.00 per share.

Additionally, Bailey said One on One’s oversubscribed IPO shows that there is a consistent and growing interest in building wealth through investing, which is a vast improvement from years ago.

One on One is expected to list on the JSE by early September.