The initial public offering (IPO) of CSB Bank Ltd closes on Tuesday, November 26. According to reports, the subscription figures for the Rs 410 crore IPO have hit the roof as the offer has received overwhelming response from investors across all categories. In such a situation, there are high chances that the allotment of shares will be done on the basis of lottery or draw, just the way it was done when the Indian Railway Catering and Tourism Corporation (IRCTC) IPO was oversubscribed.
Latest data showed that the CSB Bank IPO has been oversubscribed by 78.38 times as it has received bids for 90.57 crore equity shares against its issue size of 1.15 crore shares (excluding the anchor book). Notably, these are not final figures and the bidding is still on.
The retail investor portion has been reportedly oversubscribed by 42.32 times so far. Meanwhile, the portion set aside for non-institutional investors were subscribed 139 times and that of qualified institutional buyers by 60 times.
The price band for the CSB Bank IPO was fixed between Rs 193 and Rs 195 per share. Lot size of the IPO is 75, which means the minimum bid would be of 75 shares and it can be raised in multiple of 75 thereafter. Allotment of CSB Bank shares would happen on December 2, while the listing is scheduled for December 4.
Now, in cases of oversubscription, the allotment of shares is done by predefined rules laid down by market regulator Securities and Exchange Board of India (Sebi). When the retail category gets oversubscribed, the total number of shares available for retail investors is divided by the lot size to determine the total number of lots available for retail investors. If the total number of applications in retail category is more than the total number of lots available, then the eligibility to get shares is determined by a draw. This is a completely automated and a computerized process, leaving no room for manipulation.
Also, in such cases, no application is allotted more than one lot, regardless of the number of lots been bid for. This is to ensure that maximum investors can be allotted shares in the IPO.
Hence, it would be wise to assume that if you are an investor in the CSB Bank IPO, you will not receive the number of shares you had applied for, or even worse, you may not receive any shares at all.
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