How are IPO shares allotted ?

 Recently , we are seeing huge demand in IPO from retail investors , unfortunately many are not getting any allotment . Why this happens ? let us  know how exactly IPO shares are allotted . 


What is the IPO or Initial Public offer :  IPO is the selling of securities to the public in the primary market.  A primary market deals with new securities being issued for the first time . After listing on the stock exchange, the company becomes a publicly-traded company and the shares of the firm can be traded freely in the open market.

Procedure for allotment of shares in IPO 

If any company goes in public all bids for the shares in online , from online first they eliminate all invalid bids which were incorrectly submitted from number of total bids , then we will know number of final bids.

There are two cases amongst which the situation of a company may fall in, that are:

1 If the total number of bids made by the applicants is less than or equal to the number of shares being offered, then complete allotment of stocks will take place. Thus, every applicant who has applied will be assigned shares.

2. The total number of successful bids is more than the number of shares offered by the firm , then the allotment process of shares requires more planning. SEBI  mandates that at least one lot should be allotted to every individual who has applied.


What happens if there is a small subscription  ?

The minimum lot will be distributed amongst all applicants and the remaining shares will be assigned proportionally to the investors who have bid for more than one lot.

 

In the case where there is such an oversubscription that even one lot cannot be allotted to every applicant, then allotment takes places via lucky draw. This lottery draw will be computerized without any partiality. 


Reasons for non allotment 


Application may get rejected due to wrong entry of DMAT number , invalid PAN number or multiple submissions 

Your name wasn’t picked out in the lucky draw in the case of large oversubscription . 


all retail applications (up to 2 lacs) can apply IPO only via UPI mode or ASBA from their net banking.


reach us on pcswealthadvisers@gmail.com . 





PCS CAPITAL were first generation entrepreneurs in financial services . It was formed with foundation stone for creating long-term wealth for the investors through various financial products like Mutual fund s , Insurance , Fixed deposits and Alternate Asset products . We help you understand your financial objectives and make appropriate plan to realise them with proper risk management. rnYou can leave your contact details for professional help in your investment journey.

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