Full market-cap-weighting would require index funds to buy shares that are not for sale. Float adjustment fixes this by multiplying market cap by an investable weight factor, so a company that is 70% founder-owned enters the index at 30% of its size.
Float changes are therefore index events in their own right. A lock-up-period expiry, an insider secondary-offering, or a government privatisation raises the float factor and forces buying at the next index-rebalance even though the business did nothing.
Example: market cap $80B with 35% held by a founder. Float-adjusted cap is $52B. If the founder sells 10 points of the company, float rises to 75% and the index weight rises from $52B to $60B of equivalent size.
Related: market-cap-weighting, float, index-rebalance, index-inclusion, lock-up-period