This entry is part 2 of 2 in the series Know about IPO

The SEBI, ensures every retail applicant gets allotted a minimum bid lot, subject to availability of shares in aggregate. The system will satisfy more number of smaller applicants in the oversubscribed issues.

Process of IPO Allotment

Illustration explaining the procedure of  Allotment to retail investor.

Issue Details

Company Name       XYZ Co.        (Sample)
Offer Price 580-600
Bid Lot 20
Retail Portion 35,00,000

Subscription & Rate Finalized Details

Subscription -Retail Portion 4 times
Total Shares Applied – Retail 1,40,00,000
Rate Finalized 600

Example 1.  

The total 1,00,000 retail investor applied in the issue, in varying no. of bid lot. Issue Subscribe Oversubscribe retail Category 4 times.

From 1 lakh retail bidder , their are 5 retail individual bidder, namely A, B, C , D , E who have applied in the issue as follows. A has applied for  320 equity shares, B has applied 220 equity shares, C has applied 120 equity shares, D has applied 60 equity shares and E has applied for 20 equity shares.

As per SEBI regulations, the allotment to retail individual bidder shall not be less  than the minimum bid lot, subject to availbilty of shares.

Allotment  Sample Table for  bidders 

Sr. No. Name of Bidder Total No of equity shares applied for Total allotment Total number of equity shares eligible to be allotted
1 A 320 58 20 Equity shares (min bid lot) + 38 equity shares
2 B 220 45 20 Equity shares (min bid lot) + 25 equity shares
3 C 120 33 20 Equity shares (min bid lot) + 13 equity shares
4 D 60 25 20 Equity shares (min bid lot) + 5 equity shares
5 E 20 20 20 Equity shares (min bid lot) 

Example 2

The total 2,00,000 retail investor applied in the issue, in varying no. of bid lot. i.e. between 1 to 16 .  Issue Subscribe Oversubscribe retail Category 9.37 times.

A total 2 lakh investor bid have applied in  the issue  The retail individual bidder category is oversubscribe 9.37% . The total no of  equity shares offered retail bidders  is 35,00,000 and minimum lot size 20 shares, the maximum number of retail bidder who can be allotted bid lot will be  1,75,0000 (35,00,000/20) . The remaining 25,000 (2,00,000- 1,75,000) retail  applicant will not get allotment and such bidders will be determined on basis of draw of lots.

NO of LotsNo of Equity Shares at each lotNo. of retail bidders applying at each lotTotal No equity shares applied for at each lotNo. of retail bidder who shall received min bid lot ( to be selected on lottery)
ABCD= B*CE= (175000/200000)*C
12010,0002,00,0008750
24010,0004,00,0008750
36010,0006,00,0008750
48010,0008,00,0008750
510020,00020,00,00017,500
612020,00024,00,00017,500
714015,00021,00,00013,125
816020,00032,00,00017,500
918010,00018,00,0008,750
1020015,00030,00,00013,125
1122010,00022,00,0008,750
1224010,00024,00,0008,750
1326010,00026,00,0008,750
142805,00014,00,0004,375
1530015,00026,00,00013,125
1632010,00026,00,0008,750
2,00,0003,28,00,0001,75,000
RajendraIPOThe SEBI, ensures every retail applicant gets allotted a minimum bid lot, subject to availability of shares in aggregate. The system will satisfy more number of smaller applicants in the oversubscribed issues. Process of IPO Allotment Illustration explaining the procedure of  Allotment to retail investor. Issue Details Company Name       XYZ Co....Investment you need