. They were trying to figure out the allotment process of IPO in retail category. All four had made two applications in the IPO under Retail Individual Investors (RII) category. However, each of them had a different outcome. One of them did not get any allotment, one got allotment against both applications, and the other two got allotment in one out of two applications. They wanted to know why they got different allotment outcomes despite making the same number of applications? Sitting on the next table, I decided to pen down a note on this as many of us may still not understand how it works.
Cap on retail individual investors The cap for RII is `2 lakh and each IPO must have reserved quota for this category. But Securities and Exchange Board of India (Sebi) realised that within this category also there is a wide range. And the process of proportionate allotment may work against small retail investors. The markets regulator made an important change in the second half of 2012 in the allotment process to ensure ‘maximum RII allottees’. Let us understand how it works. In Cochin Shipyard’s IPO for instance, 1.16 crore shares (35%…