In India, the IPO allotment lottery system is a fair and transparent process used to distribute shares when there is oversubscription in an initial public offering. When a company decides to go public and issue shares to raise capital, investors can apply for these shares during the IPO period.
The allotment process begins after the IPO closing date. If the IPO is oversubscribed （meaning more applications are received than available shares）, the allocation is done through a computerized lottery system. This system ensures that all applicants have an equal chance of receiving shares, regardless of the application size.
For retail investors in India, the Securities and Exchange Board of India （SEBI） has established specific guidelines. Typically, at least 35% of the IPO shares are reserved for retail individual investors. The lottery system randomly selects applications from the pool of retail investors to allocate shares.
The process involves several steps: first, all applications are collected and verified; second, ineligible or invalid applications are rejected; third, the lottery system randomly selects applications for allotment; and finally, the allotted shares are credited to the demat accounts of successful applicants.
Investors can check their allotment status through the registrar\“s website or their brokerage platform. The refund process for unsuccessful applicants typically begins within a week after the allotment date. This system ensures fairness and equal opportunity for all participants in the Indian capital markets. |
