Allotment

Allotment

Method of distributing securities to investors if an issue has been oversubscribed

At the end of the subscription period, the demand for a new issue can exceed the number of shares being issued. In that case, the underwriting bank allots the securities with the approval of the issuer, either by lottery or on the basis of a formula. An allotment formula usually takes  the issuer's preferred target groups into account.