What is IPO Allotment?
IPO Allotment is a process whereby the registrar to the offer finalizes the process of allocating the IPO shares to the individual who has applied for an IPO subscription. The IPO allotment date is generally on the fifth day of the close of the IPO offer. The allotment is done as per SEBI’s norms. It is worth noting here that bids at or above the issue price only qualifies for share allotment.
First of all, the invalid bids that have been submitted incorrectly are rejected from the total number of bids, the remaining bids are called the successful bids for the particular IPO. Now, there can be two situations;
- The total number of successful bids is equal to or less than the offered shares– In such a case there would be a complete allotment of shares i.e. all bidders who have applied for, would be allotted the shares. In recent days this has become an exceptional case.
- The total number of bids is greater than the number of shares offered– This is generally the case that is seen in many of the IPOs and is called oversubscription. In this case, the allotment process is a bit challenging. If the oversubscription is small then the minimum lot is allotted to all subscribers and the remaining is then assigned proportionally to the investors who have bid for more than one lot. In the case of large oversubscription, the situation is such that even one lot cannot be allotted to every applicant, then allotment is done via a lottery system. The lottery draw is computerized without any partiality. Thus, in large oversubscription, many applicants do not get the allotment. We generally get to see this type of scenario in most of the IPOs.
How the check share allotment:
- Share Allotment status is available on the registrar’s website and can be checked in three ways, by entering the pan number, application number, or DP Client ID. The investor can check this on the following link of the respective registrars for the respective IPOs.
- Check allotment status on the BSE website
The steps to be followed for checking allotment are-
a) Go to the BSE website.
b) Select Equity in Issue Type
c) In the Issue Name segment, tap on X IPO in the drop-down menu
d) Type in PAN
e) Tick mark ‘I’m not a robot’.