Personal Finance

IPO Allotment Details5 min read

February 14, 2021 4 min read
IPO allotment details

IPO Allotment Details5 min read

Reading Time: 4 minutes

If you are a new investor, you would probably keep your fingers crossed for the first few times when you apply for allotment of stocks in a company’s initial public offering (IPO).

IPO is a process where a company goes public for the first time and gives a chance to investors to invest in the company by buying their shares. This could be a good opportunity for investors as they get to buy shares at a fair valuation initially as compared to what they will pay a few months later, depending on the company’s market position.

There are investors who don’t get an allotment several times in a row and might blame it all on bad luck or just a bad day.

But do you know exactly how the allotment of shares happens when an IPO hits the markets? Worry not, we’ve got you covered.

There are 3 types of quotas for investors in an IPO. They are as follows:
· Qualified Institutional buyers i.e QIB
· Non Institutional Investors i.e NII
· Retail Investors

Let’s Go Through The Initial Steps

When an organisation kick starts its IPO and makes it open to the public, all bids are registered online.

Going ahead, through an online process, all invalid bids that were incorrectly submitted are removed from the total number of bids that were received. Eventually, you will now have the final number of successful bids for the said IPO.

There are two cases amongst which the situation of a company may fall in, that are:

1. The total number of successful bids is less than or equal to the number of shares offered by the firm.

2. The total number of successful bids is more than the number of shares offered by the firm.

If the bids made are less than or equal to the number of shares being offered, then a complete allotment of stocks will take place.

Whereas, if the bids made are more than the number of shares being offered, then the allotment process of shares requires more planning. SEBI or Securities and Exchange Board of India mandates that at least one lot should be allotted to every individual who has applied.

The criteria for the allotment of shares differ from one category of investors to another.

IPO Allotment to Qualified Institutional Investors

For instance, if a Pharma company IPO has been oversubscribed 4 times, an applicant who has asked for 100k shares will only get 25k shares of the company.

High Net-worth Individuals

In this case too, if there is an over-subscription in this category, the individuals will be allocated lesser shares than what they had asked for. The total shares which will be allocated here will be the result of the total shares applied, divided by the number of times it has been oversubscribed.

Retail investors

Companies issue shares in lots. For instance, the lot size of an automobile company is 100, meaning that the investors can place bids in multiples of 100.

Allotment Procedure

Small oversubscription

The minimum lot will be distributed amongst all applicants and the remaining shares will be assigned proportionally to the investors who have bid for more than one lot.

Large oversubscription

In cases where there is such an oversubscription that even one lot cannot be allotted to every applicant, then allotment takes place via lucky draw. This lottery draw will be computerised without any partiality. Thus, during large oversubscription, some names are not drawn in the lottery system, and shares are not assigned to many applicants

How To Check IPO Allotment

To know if you have been allotted any shares, all you have to do go to the Registrar’s website and select the Company Name, enter either PAN or application number or DP ID/Client ID, enter Captcha and submit. Let’s see how to check allotment on Registrar websites

KFIN Technologies

  • Click on the link – https://ris.kfintech.com/ipostatus/ipos.aspx
  • Once you open, you can see three links that say “IPO Allotment”, click on any of the boxes to check the allotment
  • Fill up the necessary details such as IPO, Application Type, Pan Card Number, and so on
  • Once you submit the details, you can view the allotment status

Link Intime India

  • Click on the link – https://linkintime.co.in/IPO/public-issues.html
  • Select the company’s name/ IPO
  • Enter necessary details such as DP Id, Pan Number, Application Number and so on
  • Once you submit these details you can check your allotment status

Bigshare Services

Alankit

  • Click on the link – http://ipo.alankit.com/
  • Select the company’s name/ IPO
  • Enter necessary details such as DP Id, Pan Number, Application Number and so on
  • Once you submit these details you can check your allotment status

On Paytm Money App You will get a notification of allotment. Going forward, you can also check the status on the link provided by Paytm Money on your application.

In Paytm Money’s IPO section, you can click on view IPO orders and check the status of allotment by clicking on IPO application.

Possible Reasons For Not Getting An Allotment

1. The bid that you made for the IPO was termed invalid and eliminated due to incorrect Demat account number, incorrect PAN number, or multiple applications submitted for the IPO.

2. Your name wasn’t picked out in the lucky draw in the case of a large oversubscription.

3. While allotting shares companies don’t allot to investors having different pan numbers for Demat, Bank account, and UPI Id.

Conclusion

Throwback to October 2012 when SEBI implemented a new IPO allotment process that called for all retail individual investor (RII) applications to be treated equally. Under the new system, applicants are allotted at least the minimum application size, subject to the availability of shares in the aggregate.