{"id":1627,"date":"2021-02-14T08:58:12","date_gmt":"2021-02-14T08:58:12","guid":{"rendered":"https:\/\/www.paytmmoney.com\/blog\/?p=1627"},"modified":"2021-05-21T10:19:14","modified_gmt":"2021-05-21T10:19:14","slug":"ipo-shares-allotment","status":"publish","type":"post","link":"https:\/\/www.paytmmoney.com\/blog\/ipo-shares-allotment\/","title":{"rendered":"IPO Allotment Details"},"content":{"rendered":"

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\u2019s initial public offering (IPO).<\/p>\n

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\u2019s market position.<\/p>\n

There are investors who don\u2019t get an allotment several times in a row and might blame it all on bad luck or just a bad day.<\/p>\n

But do you know exactly how the allotment of shares happens when an IPO hits the markets? Worry not, we\u2019ve got you covered.<\/p>\n

There are 3 types of quotas for investors in an IPO. They are as follows:
\n\u00b7 Qualified Institutional buyers i.e QIB
\n\u00b7 Non Institutional Investors i.e NII
\n\u00b7 Retail Investors<\/p>\n

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Contents<\/p>\n

    \n
  1. Let\u2019s Go Through The Initial Steps<\/a><\/li>\n
  2. Allotment Procedure<\/a><\/li>\n
  3. How To Check IPO Allotment <\/a><\/li>\n
  4. Possible Reasons For Not Getting An Allotment<\/a><\/li>\n
  5. Conclusion<\/a><\/li>\n<\/ol>\n<\/div>\n

    Let’s Go Through The Initial Steps<\/h2>\n

    When an organisation kick starts its IPO and makes it open to the public, all bids are registered online.<\/p>\n

    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.<\/p>\n

    There are two cases amongst which the situation of a company may fall in, that are:<\/p>\n

    1. The total number of successful bids is less than or equal to the number of shares offered by the firm.<\/p>\n

    2. The total number of successful bids is more than the number of shares offered by the firm.<\/p>\n

    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.<\/p>\n

    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.<\/p>\n

    The criteria for the allotment of shares differ from one category of investors to another.<\/p>\n

    IPO Allotment to Qualified Institutional Investors<\/h3>\n

    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.<\/p>\n

    High Net-worth Individuals<\/h3>\n

    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.<\/p>\n

    Retail investors<\/h3>\n

    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.<\/p>\n

    Allotment Procedure<\/h2>\n

    Small oversubscription<\/h3>\n

    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.<\/p>\n

    Large oversubscription<\/h3>\n

    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<\/p>\n

    How To Check IPO Allotment<\/h2>\n

    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<\/p>\n

    KFIN Technologies<\/h3>\n