Allotment

Allotment is the process through which a company allocates newly issued shares to applicants who bid during an IPO, Follow-on Public Offer (FPO), or rights issue. In India, the allotment process is governed by strict SEBI regulations to ensure fair distribution across investor categories.

In a book-built IPO, shares are reserved in specific proportions: 50% for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs or HNIs), and 35% for Retail Individual Investors (RIIs). If any category is undersubscribed, the surplus flows to oversubscribed categories.

For the retail category, if total applications exceed available shares, allotment is done via lottery. Each retail applicant who bid at the cut-off price has an equal probability of receiving one lot. For instance, when the Tata Technologies IPO was oversubscribed 69x in the retail category, most retail applicants received either one lot or no allotment at all — the lottery determined who received shares.

The registrar to the issue (commonly Link Intime or KFin Technologies in India) processes allotment within 6 working days of issue close under SEBI's T+3 listing timeline. Allotted shares are credited directly to the applicant's Demat Account, and refunds for unallotted applications are processed via ASBA (Application Supported by Blocked Amount), meaning the blocked funds are released back to the bank account.

Investors can check their allotment status on the registrar's website or the BSE IPO portal using their PAN or application number. Understanding allotment odds is crucial for IPO investing — heavily oversubscribed issues in the retail category often have sub-5% allotment probability.