New IPO Allotment – How it work


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 Price580-600
Bid Lot20
Retail Portion35,00,000

Subscription & Rate Finalized Details

Subscription -Retail Portion4 times
Total Shares Applied – Retail1,40,00,000
Rate Finalized600

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 BidderTotal No of equity shares applied forTotal allotmentTotal number of equity shares eligible to be allotted
1A3205820 Equity shares (min bid lot) + 38 equity shares
2B2204520 Equity shares (min bid lot) + 25 equity shares
3C1203320 Equity shares (min bid lot) + 13 equity shares
4D602520 Equity shares (min bid lot) + 5 equity shares
5E202020 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
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