Plaza Wires IPO Allotment
Understanding IPO Allotment
An Initial Public Offering (IPO) is the process by which a private company becomes publicly traded by offering its shares to the public for the first time. IPO allotment is the allocation of shares to investors . Who have subscribed to the IPO during its subscription period.
Importance of IPO Allotment
IPO allotment is a critical step in the IPO process . As it determines the distribution of shares among retail investors, institutional investors, and other categories. It is done to ensure a fair and equitable distribution of shares . To prevent any monopolization by specific investors or groups.
Process of IPO Allotment
Subscription Period:
During the IPO subscription period . Investors can bid for shares at a specified price range. Retail investors, institutional investors, and high-net-worth individuals (HNIs) submit their bids through ASBA (Application Supported by Blocked Amount) . With their desired quantity and price.
Allotment Process:
After the closure of the subscription period, the company, along with the lead managers and registrar, reviews the bids. They consider various factors like investor category, demand, subscription amount, etc., to determine the allotment.
Pro-rata Allotment:
In case of oversubscription (when the demand for shares exceeds the number of shares available), the allotment is often done on a proportionate basis. For example, if a company receives five times the number of bids for shares available, each investor might receive one-fifth of the shares they applied for.
Allotment Intimation:
Once the shares are allocated, the company issues allotment letters or updates through emails or SMS to successful applicants, specifying the number of shares allotted to them.
Listing on Stock Exchange:
After the allotment process is completed, the company gets listed on the stock exchange, and the shares become tradable for investors.
Conclusion
IPO allotment is a crucial step in the IPO process, ensuring a fair distribution of shares among investors. It involves a meticulous review of bids and demands to allocate shares proportionately. Investors eagerly await the allotment results as it determines their stake in the newly listed company and an opportunity to be part of its growth journey.
