Understanding the IPO share allotment process is crucial for public market investors. In India, public subscription is divided into three primary categories: Retail Individual Investors (RII), Non-Institutional Investors (NII/HNI), and Qualified Institutional Buyers (QIB). Each category is allocated a fixed percentage of the total issue, and the rules of allotment differ significantly based on these groupings.
Retail Category Allotment Rules
SEBI rules state that the retail allotment should be conducted in a way that maximizes the number of unique investors who receive shares. Thus, if a retail category is oversubscribed, shares are allotted through a computerized lottery draw. Every retail investor who applied for a single lot gets equal probability. No matter how many lots you bid for, you will get at most 1 lot if it is oversubscribed.
HNI and QIB Allotment Rules
For HNIs, the category is further split into Small HNI (bidding between ₹2 Lakh and ₹10 Lakh) and Big HNI (bidding above ₹10 Lakh). Allotment in the NII/HNI category is done proportionally. For QIBs, allotment is discretionary and decided by the merchant bankers based on institutional credentials. If you are bidding as a retail investor, applying for multiple lots in a single account does not help. You are better off applying in the names of different family members to increase your lottery chances.