Does IPO gets allocated to people who apply first?

asked Wednesday, July 25, 2018

IPO allotment doesn't happen on the basis of who applied first or the first come, first serve basis. It depends on the response to the IPO from investors. If the IPO has not received good response from the investors and it is under subscribed then you may get allotted as many lots you have applied for. In other case, if the IPO is oversubscribed owing to high demand from investors, then allocation of shares to retail investors depends on the total number of shares available in the retail quota divided by the minimum lot size. So, if 10 lakh shares are available for retail investors and 2000 shares is a lot size then 500 applicants will get the shares. If the applicants are more than 500 then a lottery is used to select the applicants for allotment.

answered Wednesday, July 25, 2018

1 Comments

1. Animesh Kumar

| Link|December 31, 2021 2:23:42 PMReply

I've one question related to oversubscription of IPO. For simplicity, let's assume there is 1 share in a lot and there are 50 shares and hence 50 lots available in retail category. Now 200 applications come for these shares and minimum lots which could be allotted is 1. As per the rule, lucky draw would be done. Suppose in the first lucky, application of Mr. A is selected who has applied for 10 lots. Will he get all 10 lots because there are still more than 10 shares available when his name got selected or he would get just one lot because there is oversubscription ?
Now if the answer is he would get only 1 lot as there is oversubscription, then whether his name would be removed from the lucky draw for further allocation or his name would still be considered as he applied for more lots ?
I think it's a common question but I couldn't find this on the Internet.

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Does IPO gets allocated to people who apply first?

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