What Is the IPO Allotment Process?
The IPO allotment process is the method by which shares in an IPO are distributed among investors after the subscription period closes. In India, SEBI mandates specific allotment rules for different investor categories to ensure fairness. For oversubscribed IPOs, retail investors are allotted shares through a computerised lottery, while institutional investors receive proportional allotments.
Investor Categories and Allotment Rules
| Category | Reservation | Allotment Method |
|---|---|---|
| Retail Individual Investors (RII) | 35% | Lottery if oversubscribed; each applicant gets one lot maximum |
| Non-Institutional Investors (NII/HNI) | 15% | Proportionate allotment |
| Qualified Institutional Buyers (QIB) | 50% | Discretionary/proportionate by lead managers |
How the Retail Lottery Works
If a retail portion is oversubscribed, the registrar conducts a computerised draw. Each unique application (one PAN, one lot minimum) is entered into the draw. The system selects the number of winning applications equal to the shares available divided by one lot size. A single application can win only one lot regardless of how many lots were bid for. This is why retail investors often maximise their chances by applying from multiple family members' accounts.
How NII/HNI Allotment Works
HNI applications are allotted proportionately. If the HNI portion is subscribed 10 times, each applicant receives one-tenth of the shares they applied for. For very large applications, even proportionate allotment can be a meaningful quantity. The minimum application for the NII category is above Rs 2,00,000 but there is no upper cap.
Timeline of the Allotment Process
- IPO subscription closes on Day T.
- Basis of allotment is finalised by Day T+5 or T+6.
- Shares are credited to demat accounts by Day T+6.
- Refunds of unallotted amounts are processed by Day T+6.
- Listing and commencement of trading on Day T+7.
Basis of Allotment Document
The Basis of Allotment document is published by the registrar and available on BSE, NSE, and the registrar's website. It shows the total applications received in each category, subscription levels, and the exact allotment ratio used. This document is useful for verifying whether allotment was conducted fairly and transparently.
Key Takeaway
The IPO allotment process in India is transparent, SEBI-regulated, and computerised to ensure fairness across categories. Understanding that retail allotment is a lottery encourages investors to apply from multiple accounts within the family to improve chances. Use the Lemonn app to track live IPO subscription data and stay informed about allotment results.
