The IPO allotment process involves the distribution of shares to investors who have applied for an IPO. Based on demand and the number of applications, shares are allocated through a pro-rata system, lottery, or other criteria, ensuring a fair and transparent distribution of shares among applicants.
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What is IPO Allotment?
IPO allotment refers to the process of distributing shares to investors who have applied for an initial public offering (IPO). Based on the demand for shares and the allocation mechanism, investors receive a certain number of shares or may be left without any allotment.
The allotment is usually done through a lottery system or on a pro-rata basis, depending on the number of applications received. If demand exceeds supply, investors may receive partial allotment or none at all. This ensures a fair distribution among applicants.
Once the allotment process is complete, the successful applicants will receive shares in their Demat accounts. The remaining unallotted shares are then available for listing in the secondary market, where they can be traded.
What Is The Process of IPO Allotment?
The IPO allotment process begins when investors apply for shares through their brokers. After the subscription period ends, the company, along with its underwriters, determines the number of shares each investor receives, based on the demand and allocation mechanism.
If the IPO is oversubscribed, the allotment is typically done using a lottery or pro-rata method, where applicants are allocated shares based on the number of shares they applied for. Once the allotment is made, the shares are credited to the investors’ Demat accounts.
For example, if you applied through Alice Blue, after the IPO allotment, you can easily check the status of your application and track the credit of shares in your Demat account. Ensure your account is active and linked for a smooth process.
How To Check Allotment of IPO?
You can check the IPO allotment status by visiting the registrar’s website or through your broker’s platform. If you applied through Alice Blue, you can check the allotment status directly on their portal using your application details.
Typically, the allotment status can also be checked on the official websites of IPO registrars, where you can enter your PAN or application number to view the status. Once the process is completed, the registrar will update the status and you will be notified.
The IPO allotment status is usually available within 7-10 days after the IPO subscription period ends. It is essential to keep track of the dates and check regularly for updates. If you’ve been allotted shares, they will appear in your Demat account shortly.
IPO Allotment Time
The IPO allotment time typically takes 3-10 days after the issue closure. During this period, the registrar processes all applications and once the allocation method is decided, the shares are allotted to successful applicants.
This timeline may vary depending on the IPO’s subscription status and the method used for allotment. If the demand is high, it might take longer for the registrar to finalize and confirm the allocation. You can monitor the timeline through your broker or the official registrar’s site.
Once the allotment is confirmed, shares are credited to the Demat accounts of the allottees. If you applied through Alice Blue, you can track the progress directly via the platform. The shares usually appear within 2-3 days after the allotment.
How IPO Shares Are Allotted?
IPO shares are allotted based on the number of applications received and the subscription levels. If the IPO is oversubscribed, the allocation is done through either a lottery or a pro-rata system, with each applicant receiving a portion of the available shares.
For instance, if you apply for an IPO through Alice Blue, you may receive a full or partial allotment depending on the demand and your application’s size. If you are unsuccessful, you won’t receive any shares, but your money will be refunded promptly.
In a pro-rata system, the number of shares allotted is proportional to the number of applications received. This ensures fairness and transparency in the process. If you’re lucky enough to get a full allotment, the shares will be credited to your Demat account.
IPO Allotment Rules
IPO allotment rules vary based on the type of issue and the method of subscription. In a public offering, shares are allotted to eligible applicants based on subscription levels, with priority given to retail investors, followed by institutional investors.
The rules typically include a minimum lot size for applications, where investors can apply for multiples of the lot size. If you apply through Alice Blue, the system will guide you on how many shares you can apply for within the permissible limits based on the IPO rules.
In case of oversubscription, the allotment is often done on a pro-rata or lottery basis. Investors should keep track of the IPO allotment rules, as non-compliance could lead to the rejection of their applications and the money would be refunded.
Reasons For Non Allotment of Shares In An IPO
Non-allotment of shares in an IPO can occur for several reasons, such as oversubscription, inadequate applications, or technical errors. If demand exceeds supply, many investors may not be allotted shares, especially in highly popular IPOs.
Another reason for non-allotment is if the investor fails to meet the eligibility criteria or their application is incomplete or inaccurate. In such cases, the registrar may reject the application and the money is refunded. Always ensure your application is complete and accurate to increase your chances of allotment.
Lastly, if you applied for a large quantity of shares and the allotment is done on a pro-rata basis, the number of shares allotted may be reduced. Always be aware of the subscription levels and apply accordingly.
Process Of IPO Allotment – FAQs
IPO allotment refers to the distribution of shares to investors who have applied for an initial public offering. After the subscription period ends, shares are allotted to successful applicants based on demand, the number of shares applied for and the allocation method used.
The IPO allotment process involves distributing shares to applicants based on demand and the total number of shares offered. Allocation can be done via a lottery or pro-rata basis and shares are credited to the investors’ Demat accounts once allotted.
Once an IPO is allotted, shares are credited to the Demat accounts of the successful applicants. Investors can then hold the shares or sell them on the stock exchange once the stock is listed, depending on their investment strategy.
Yes, you can sell IPO shares on the listing day if they are allotted to you. The shares will be credited to your Demat account before the stock is officially listed on the exchange, allowing you to trade them once the market opens.
If an IPO is oversubscribed, shares are allotted using a lottery or pro-rata system. Investors may receive partial allotment based on the number of shares applied for and the remaining unallotted funds are refunded after the allotment process.
To increase your chances of getting an IPO allotment, apply for smaller lot sizes, diversify your applications across different accounts, or apply through multiple family members. Increasing your application amount can also improve your chances in the pro-rata allotment process.
While there’s no guaranteed way to secure IPO allotment, you can improve your chances by applying early, applying in smaller lots and ensuring your application is correct. Additionally, applying through a reliable broker like Alice Blue can ensure smooth processing.
Yes, the money is blocked in your bank account when you apply for an IPO, but it is only deducted once shares are allotted. If no allotment occurs, the blocked amount is refunded after the IPO allotment process.
If an IPO is not allotted to you, the money remains in your bank account. In case of no allotment, the amount is refunded to the applicant’s bank account within a few days. No shares are credited to your Demat account.
Disclaimer: The above article is written for educational purposes and the companies’ data mentioned in the article may change with respect to time. The securities quoted are exemplary and are not recommendatory.
