A high number of investors have similar question "why I never get IPO allotment", it might be the several reason people not getting allotment or they getting when low premium.
- Heavily oversubscribed IPO. Allotment chances are low on oversubscribed IPO
- Failure to approve UPI mandate request.
- Multiple IPO applications made using the same PAN number Demat.
- Incorrect IPO application.
- Individual Investor applied through employee quota.
- Submitting a bid at a price lower than the final issue price.
- UPI mandate not approved within deadline.
Naturally the allotment process would go for a random system, wherein it filters and selects highest bidders(bid on the cut-off price) and if the number of bids are far higher than expected, randomly selected investors among them will be allotted shares. IPO would specify total number of available shares and a general price range. But when a particular IPO gets over-subscribed shares will be allotted by the lottery system.
What is the New IPO allotment process
The IPO allotment mechanism depends on the investor category and IPO subscription levels. If an IPO is undersubscribed in each investor category, all investors with valid applications will receive full allotment. An IPO must receive at least 90% aggregate subscription to be successful. If an IPO is oversubscribed for one category and under-subscribed for another category, the oversubscription can be adjusted with the under-subscribed portion of the other category except QIBs. In case of oversubscription, the issuer will allot shares based on a lottery system or proportionately based on the investor category. Let’s take a look at the IPO allotment criteria for each investor category. When a company launches its new IPO, the general public applies for it and after this the company allots shares to the applicants in the New IPO allotment process. This process is conducted by some major registrars, such as:
IPO Bidding Category
● Retail individual investors (RII)
● Non-institutional investors (NII)
● Qualified institutional investors (QIB)
● Employee
● Shareholders
● Anchor Investors
Individual investors who participate in an IPO with less than Rs 2 lakh fall into the retail investor (RII) category. NIIs are further divided into small NIIs (bidding less than Rs 10 lakh) and large NIIs (bidding more than Rs 10 lakh) based on their investment amount. Anchor investors, who invest more than Rs 10 crore in an issue, are part of the QIB category. In some IPOs, there is a special reservation for employees or other reserved categories such as shareholders defined in the RHP.
IPO live Subscription Timing
The investor can submit bids for IPO shares to the stockbroker or bank at any time as long as the public issue is open for bidding. The IPO bidding platform of the stock exchange is open from 10 am to 5 pm. Even though the bank/broker accepts bids for 24 hours, bids will be submitted to the stock exchanges only between 10 am on the opening day of the IPO and 5 pm on the closing day of the IPO.
Checkout IPO window form here
Types of IPO
Fresh Issue – In this, the company issues new shares and uses the capital raised for business expansion, repaying debt, or other business purposes.
Offer for Sale (OFS) – In this, existing shareholders (such as promoters, investors) sell their shares, which does not give any additional funds to the company.
Why IPO goes Oversubscribed?
IPO over subscribed it depend on the IPO premium and market sentiment, many times investors submitting application from multiple account to make high chance of allotment, people also want to get listing gain in case of higher premium, many company provided listing gain more than 100%. doubling money within an week that is much better investing somewhere else, investors also making long term holding through IPO shares by watching company performance.
IPO allotment Status click here
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