---
title: "Understanding oversubscribed IPOs: How the Allotment Works?!"
description: "When an IPO is oversubscribed, the registrar conducts a lottery to allot shares to applicants. An IPO becomes oversubscribed when the number of…"
category: arrow
subcategory: ipo
slug: understanding-oversubscribed-ipos-how-the-allotment-works
canonical: https://support.arrow.trade/arrow/ipo/understanding-oversubscribed-ipos-how-the-allotment-works/
---

# Understanding oversubscribed IPOs: How the Allotment Works?!

> When an IPO is oversubscribed, the registrar conducts a lottery to allot shares to applicants. An IPO becomes oversubscribed when the number of…

## Short answer

When an IPO is oversubscribed, the registrar conducts a lottery to allot shares to applicants. An IPO becomes oversubscribed when the number of applications exceeds the shares available for allotment.

## Example scenario

Assume 10 investors have applied for an IPO at the cut-off price (the offer price at which shares get issued to investors). Each investor has placed a bid for 1 to 5 shares:

Quantity Applied

If only 5 shares are available for allotment, the lottery result could be:

Quantity Allotted

Investors 2, 3, 5, 9, and 10 won the lottery and will receive shares. If you had applied at a price below the upper price band, your bid would not be considered for the allotment lottery.

## Related

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Source: https://support.arrow.trade/arrow/ipo/understanding-oversubscribed-ipos-how-the-allotment-works/
Publisher: Arrow / iRage Broking Services LLP