The basis of allotment in an IPO, explained
When an IPO gets more bids than shares, the 'basis of allotment' is the set of rules, approved by the stock exchange, that decides who gets what.
What it is
The basis of allotment is finalised by the registrar and the lead manager together with the stock exchange after the issue closes. It sets out, for each category, how many applications were received, how many shares each is entitled to, and how many applicants get them.
How each category is handled
Retail: if the category is subscribed more than 1 time, successful applicants are chosen by a computerised draw of lots, and each generally receives one lot. If it is subscribed 1 time or less, valid applications are allotted in full.
HNI (NII): in an oversubscribed issue, generally the minimum application size is allotted by draw, and any shares left over are shared out in proportion to what was applied for. The offer document gives the exact method.
QIB: shares are allotted proportionately, with mutual funds getting a reserved part of the QIB portion. Anchor investors are allotted before the issue opens.
Where to find it
The exchange publishes the basis of allotment for each IPO on its website, usually on the allotment day. It is a table by category: applications received, shares applied for, and the ratio of allotment.
What it means for you
Your allotment is decided by this basis and your own application, not by when you applied or which broker you used. If you were allotted nothing in an oversubscribed retail issue, you were not selected in the draw; if you have no record at all, check whether the application was valid.
Related guides
- How IPO allotment works
- IPO categories explained: retail, HNI (NII) and QIB
- How to check IPO allotment status
More on subscription, allotment and refunds
- What is IPO subscription (times subscribed)?
- IPO money still blocked? What to do
- How to improve your chances of an IPO allotment
- Why IPO applications get rejected
- What happens when an IPO is undersubscribed
- IPO shares not showing in your demat account
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Information, not investment advice. GMP is an unofficial grey-market indicator; figures come from public sources (InvestorGain) and may be late or wrong. Not registered with or affiliated to SEBI, the exchanges, the registrars or InvestorGain.