An initial public offering (IPO) is the process by which a private company issues its shares to the public for the first time. Investors who want to invest in an upcoming IPO need to know the IPO allotment process. Knowing the IPO allotment process helps them make decisions and monitor their investment effectively. This article explains the IPO allotment process steps, rules, and how to check the allotment status without assuming or using subjective language.
What Is an IPO Allotment?
IPO allotment is the procedure by which shares are allotted to applicants who bid for them during the IPO bidding period. The allotment is based on the number of shares available and the number of bids received. If demand is more than supply, allotment is made through a proportionate system or lottery-based system as per the guidelines issued by regulatory bodies.
IPO Allotment Process Steps
The IPO allotment process entails several sequential steps. Every step is a part of ensuring transparency and equity in share distribution:
Bidding Period: The IPO procedure starts with a bidding window, which is usually a few days in duration. Investors submit bids within the specified price band and lot size.
Application Submission: Investors place their applications by submitting them via brokers, banks, or on the Internet. The application price is blocked from the applicant’s bank account by using the ASBA (Application Supported by Blocked Amount) facility.
Application Verification: After closing the bidding process, applications are checked for suitability, availability of funds, and adherence to regulatory norms.
Finalization of Basis of Allotment: Upon verification, the registrar of the IPO prepares the basis of allotment. It contains the number of valid applications received and the allotment method (lottery or proportionate basis).
Approval and Allotment: The stock exchange and regulatory authorities scrutinize the allotment procedure. Upon approval, shares are allotted to applicants eligible for it.
Credit of Shares: Allocated shares are credited to the investor’s demat account. When shares are not allocated, the blocked amount is released.
Listing on the Exchange: Last comes the listing of shares in the stock exchange. Investors can now trade the shares depending on the demand in the market.
IPO Allotment Rules
Retail Investor Reservation: Some shares are reserved for retail individual investors. This reservation ensures wider participation.
Proportionate Allotment: When the number of applications is greater than the number of available shares, allotment is made proportionately or by the lottery system, particularly in the event of oversubscription.
Minimum and Maximum Limits: Investors are required to apply within the specified minimum and maximum limits. Applications outside these limits are invalid.
ASBA Compliance: Investors should have adequate funds in their bank accounts. The ASBA process requires funds to be blocked until allotment is done.
PAN and Demat Account: Permanent Account Number (PAN) and demat account should be valid for application. Repeated applications under the same PAN may result in rejection.
How to Check IPO Allotment Status?
After applying for an IPO, investors can check the ipo allotment status through different methods. The process is straightforward and involves the following steps:
Visit the registrar website: Each IPO has a designated registrar responsible for managing the allotment. Investors can visit the registrar’s official website.
Select IPO: Choose the specific IPO from the list of active or recently closed IPOs.
Enter Application Details: Enter either the PAN number, application number, or demat account details as necessary.
Submit and View Status: Submit the form after entering the details. The allotment status will be indicated, indicating whether shares are allotted or not.
Alternatively, investors can also check the status on the official stock exchange websites. The steps are the same: choose the IPO, enter the necessary details, and view the result.
Any investor who is willing to invest in the primary market needs to remember the process of the forthcoming IPO and the step-by-step IPO allotment process. Following the laid-out steps and regulations and confirming the status through the right channels, investors can go through the process with coherence and organization. Precise awareness of the steps to be followed, rules, and allotment-checking methods of the IPO allotment process makes the investment process more comfortable.
