Over-subscription of IPO : how is it handled?

#1
Friends, could one of you please explain how the over-subscription of IPO is handled? They say such and such IPO is subscribed 10 times etc.

When you have applied for 10 shares (assuming it is the minimum number to order during the ipo) and that the issue has been over subscribed by 10 times, is there any guarantee they would issue 1 share to you?

Or, is it that you have to order [(min lot size) x (number of times it is over subscribed)] in order to be issued with "min lot size" numbered shares? I am just trying to asses the chances of shares being issued when one orders just the "minimum" number of shares under the over subscription scenario.

I checked the IPO section of this forum, but I don't seem to find the answer anywhere. Thank in advance for any information you can throw in this regard.
 
#2
And, for example, for Sasken IPO this was the subscription information (by 16th morning):
Retail - 0.14 times
HNI - 0.0084 times
QIBs - 38.65 times
Overall - 20 times
Any information as to how to interpret these numbers?
 
#3
Why bother? Just go for it. If you have the funds invest in NI or else as a retailer. Actually retail may be oversubscribed by at least 20 times. But you cannot apply for more than 385 shares ie. witin Rs 1 lac. Lot size is 25. But that 1/20 rule may not necessarily apply. So, leave it to Ganeshji and just apply :)
All the best.
 
#6
Hi,

The IPO allocation process in case ov oversubscription -

BASIS OT ALLOTMENT RETAIL INVESTORS : EXAMPLE CASE = limit 1 lac minimum lot 100 shares price range 55 to 60 scrip XYZ
FIRM ALLOTMENT : when the issue is fULLY / PARTLY SUBSCRIBED firm allotment is made for no. of shares as applied by you .PROPORTONATE ALLOTMENT : when a issue is OVERSUBSCRIBED prportionate allotment is made . i.e. if issue oversubscribed 6.5 times in retail then divide your application quantity by 6.5 and shares will be alloted in multiple of 1 share above minimum lot i.e. 108,123,and so on. however persons applying between 100 to 600 shares if they divide by 6.5 then the shares will work out less than 100 ,since minimum allotment has to be 100 shares instead of rejecting these applications applicants between 100 to 600 shares will be allotted 100 shares by lottery wether u have applied 100 or 600 shares . ofcourse probability for success in lottery will be better for those applying 600 shares over those applying 100 shares. now worst case issue oversubscrbed say 17 to 20 times then one will get allocation of minimum lot of 100 shares alloted by lottery wether have applied for 100 shares or full 1600 shares with different probability chances i.e. 1600 application will have better chance over 100 share application in lottery. Hope u will find this informative,and will understand the allotment procedure . You can find out yourself chances of getting no. of shares by viewing cutoff bid at bseindia dot com for book built IPO late at 9 PM on closing day . ONLY RETAIL ,&EMPLOYEES & EXISTING SHARE HOLDERS APPLYING BELOW 1 LAC are allowed to bid at cut off . cut off bid is open price bid with an agreement that whatever price is determined shall be applicable to retail bidders,for this they pay higher cap amount i.e. 60 in this example case

Now the answers to your specific queries -

1. During the IPO, the companies have to allot atleast the shares required for minimum application. For example, if the minimum no of shares required in an application is 10, then the company will allot atleast 10 shares or more (if you get allottment.).

2. Yes. If you apply for [(min lot size) x (number of times it is over subscribed in your category)] , then you will get "min lot size" numbered shares.



bhangima said:
Friends, could one of you please explain how the over-subscription of IPO is handled? They say such and such IPO is subscribed 10 times etc.

When you have applied for 10 shares (assuming it is the minimum number to order during the ipo) and that the issue has been over subscribed by 10 times, is there any guarantee they would issue 1 share to you?

Or, is it that you have to order [(min lot size) x (number of times it is over subscribed)] in order to be issued with "min lot size" numbered shares? I am just trying to asses the chances of shares being issued when one orders just the "minimum" number of shares under the over subscription scenario.

I checked the IPO section of this forum, but I don't seem to find the answer anywhere. Thank in advance for any information you can throw in this regard.
 

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