Prakash Kafle/Kathmandu. In Nepal, IPO allotment is conducted through a computerized lottery system under the supervision of CDS and Clearing Limited (CDSC) and regulated by Securities Board of Nepal (SEBON). Once allotted, shares are listed and traded on Nepal Stock Exchange (NEPSE).
When an IPO is oversubscribed (more applicants than available shares), a structured digital lottery method is used. Below is a detailed explanation including the pre-allotment process, serial number system, skip value calculation, and final selection method.
Pre-Allotment Process
Before the actual lottery draw begins, several technical steps are completed:
Application Verification
- All applications submitted through Mero Share (ASBA system) are collected.
- Invalid applications (wrong details, insufficient balance, duplicate entries, etc.) are rejected.
- Only valid applications are counted.
7-Digit Unique Number Generation
Each valid applicant is assigned a 7-digit unique identification number by the system.
This ensures:
- No duplication
- Equal and transparent participation
- Randomized processing
New Serial Number Arrangement
After generating unique IDs:
- Applications are arranged in Ascending Order (smallest to largest number).
- Sometimes, for system fairness, reverse ordering may also be internally generated for cross-verification.
- The final active list is maintained in ascending numerical order for draw calculation.
Determining Total Allottees
Example:
- Total valid applicants = 500,000
- Total shares for public = 1,000,000
- Minimum allotment = 10 shares
Total possible allottees =
1,000,000 ÷ 10 = 100,000 allottees
Only 100,000 applicants can receive shares.
Skip Value Calculation
This is a mathematical distribution technique used in Nepal’s computerized lottery.
Formula:
Example:
Valid Applications = 558,000
Allottees = 100,000
Skip Value = 558,000 ÷ 100,000
Skip Value = 5.58
This means approximately every 5.58th applicant will receive shares.
Ball Number Selection (Random Starting Point)
To ensure randomness:
- A number is randomly chosen from digits 1 to 9.
- Suppose the system randomly selects 3.
Now the selection begins.
Allotment Using Ascending Order + Skip Value
Step-by-step example using your method:
First Selection
Starting ball number = 3
So, the 3rd number in ascending order gets IPO.
Second Selection
Skip Value = 5.58
Add:
3 + 5.58 = 8.58
The integer part (8) is considered.
The 8th applicant in ascending order gets IPO.
Third Selection
8.58 + 5.58 = 14.16
Integer part = 14
The 14th applicant gets IPO.
Fourth Selection
14.16 + 5.58 = 19.74
Integer part = 19
19th applicant gets IPO.
This process continues until all 100,000 allottees are selected.
The decimal values are continuously added, but only the whole number position is considered each time.
Final Allotment
After the computerized process:
- The selected serial numbers are finalized.
- Allottees receive minimum 10 shares.
- Shares are credited to Demat accounts.
- Non-selected applicants’ bank amounts are automatically released.
Important Clarification
Yes — the method you described (ascending order + random starting ball number + skip value addition) reflects the general computerized proportional lottery logic used in Nepal’s IPO allotment system.
However:
- The full technical algorithm is managed internally by CDSC software.
- The process is automated.
- It is supervised for transparency.
- It is not manual ball picking, but a digital randomization process.
Conclusion
IPO allotment in Nepal is based on:
- 7-digit unique applicant numbers
- Ascending serial arrangement
- Random starting digit (1–9)
- Skip value formula
- Computerized proportional distribution
The system ensures fairness, transparency, and equal opportunity for all valid applicants.
