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 Lots | No of Equity Shares at each lot | No. of retail bidders applying at each lot | Total No equity shares applied for at each lot | No. of retail bidder who shall received min bid lot ( to be selected on lottery) |
|---|---|---|---|---|
| A | B | C | D= B*C | E= (175000/200000)*C |
| 1 | 20 | 10,000 | 2,00,000 | 8750 |
| 2 | 40 | 10,000 | 4,00,000 | 8750 |
| 3 | 60 | 10,000 | 6,00,000 | 8750 |
| 4 | 80 | 10,000 | 8,00,000 | 8750 |
| 5 | 100 | 20,000 | 20,00,000 | 17,500 |
| 6 | 120 | 20,000 | 24,00,000 | 17,500 |
| 7 | 140 | 15,000 | 21,00,000 | 13,125 |
| 8 | 160 | 20,000 | 32,00,000 | 17,500 |
| 9 | 180 | 10,000 | 18,00,000 | 8,750 |
| 10 | 200 | 15,000 | 30,00,000 | 13,125 |
| 11 | 220 | 10,000 | 22,00,000 | 8,750 |
| 12 | 240 | 10,000 | 24,00,000 | 8,750 |
| 13 | 260 | 10,000 | 26,00,000 | 8,750 |
| 14 | 280 | 5,000 | 14,00,000 | 4,375 |
| 15 | 300 | 15,000 | 26,00,000 | 13,125 |
| 16 | 320 | 10,000 | 26,00,000 | 8,750 |
| 2,00,000 | 3,28,00,000 | 1,75,000 | ||