how lottery system works in ipo

cy520520 • 2025-11-10 19:52:03 • views 453

In India, the Initial Public Offering （IPO） lottery system is a fair and transparent method used to allocate shares when there is oversubscription. This system ensures that all investors have an equal chance of receiving shares, regardless of the size of their application.

The process begins with investors applying for shares through their brokers or online platforms. When the IPO is oversubscribed, meaning there are more applications than available shares, a computerized lottery system is activated. This system randomly selects applications to determine who receives the shares.

For retail investors, the lottery system typically allocates shares in lots. Each selected application receives one lot of shares, and if multiple lots are applied for, the allocation may be proportionate. The results are announced on the stock exchange websites and through brokers, and refunds are processed for unsuccessful applicants.

The Securities and Exchange Board of India （SEBI） regulates this process to maintain fairness and prevent manipulation. This system is crucial in the Indian market to ensure equal opportunity for all investors participating in IPOs.