Allotment is the process of allocating shares to shareholders, based on prior agreements, most commonly seen in an IPO. This allotment of shares is based on conditions that must be satisfied before the shares are issued.
Points To Remember: After the closure of an issue, the bids that are received from the shareholders are put under different categories including:
Firm allotments
Qualified Institutional Buyers (QIBs),
Non-Institutional Buyers (NIBs), and many more.
After classification of the received bids, the oversubscription ratios are then calculated for the respective groups against the shares reserved for them. The bids are then aggregated amongst different buckets based on their applied shares. The calculated oversubscription ratio is then added to the applied shares.
This process is governed by SEBI’s ICDR regulations in India.