IPO Terminology
Subject to Sauda
Subject to Sauda is an agreement in the grey market where a buyer buys an IPO application from a seller, but the transaction is valid only if the seller receives share allotment in the IPO. If no shares are allotted, the deal is cancelled.
Why it matters
Unlike Kostak, Subject to Sauda deals only yield a payout if the application gets successfully allotted shares.
Common Questions about Subject to Sauda
Is Subject to Sauda riskier than Kostak?
Yes, for the seller, because they do not get paid if the application is not selected in the allotment lottery. For the buyer, it is safer because they don't pay unless allotment is secured.