When the IPO is oversubscribed by applicants, how applicants get allotment, is there any prescribed process or first come first serve basis or any other thing.
I tried to google it,but didn’t find proper answer
Through Lottery System. First preference in the lottery is given to the people who have applied for minimal lot.
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if you apply for the maximum amount under retail, you are sure to get allotted some shares.
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In retail category, the allotment is done on a random basis. For categories other than retail, the allotment is done on a proportionate basis. You can check out this post for more details:
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No longer the case. It used to happen earlier.
Now allotment process is designed in such a way that in case of oversubscription, effort will be made to allot atleast 1 lot to all applicants. If that is not possible, random lottery will be used.
So practically, for oversubscribed IPOs, whether you make application for 1 lot or max amount in retail, chances of getting allotment are same.
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As far as I know, each successful applicant gets 1 lot of shares allotted first and the balance shares get allotted proportionately. Sometimes, oversubscription is so large that each successful applicant doesn’t even get a single lot of shares allotted. In such a case, a lucky draw system is used to do the allotment using a computer.
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