InvestorQ : When an IPO gets oversubscribed, does the company get to retain the additional amount?
Arusha Ray made post

When an IPO gets oversubscribed, does the company get to retain the additional amount?

Answer
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Mahil Khan answered.
1 year ago


That is only possible in case of a greenshoe option available. When an issue gets oversubscribed, it is a sign of excess demand for the stock. That means you cannot give full allotment to the bidders. Allotment differs based on the category of investors. For retail investors, the basis of allotment will be done to ensure that as many distinct applicants as possible get IPO allotment. In case of HNI investors (who apply more than Rs.2 lakh) the allotment is proportional based on the oversubscription. So if an HNI applies for 10,000 shares and the oversubscription is 10 times in the HNI category, then he gets an allotment of 1000 shares. In case of institutional QIBs, the IPO allotment is done on a discretionary basis.