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Puneinvest > Blog > IPO > New IPO Allotment – How it work
IPO

New IPO Allotment – How it work

Last updated: 2012/12/14 at 5:07 PM
Rajendra Todkar Published December 14, 2012
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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

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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.

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