Allotment definition refers to the process where the newly issued shares of a company are distributed amongst the investors who have subscribed to them. This process is facilitated by the underwriters, who are responsible for ensuring that the shares are subscribed to and allocated appropriately. Allotment is an important step in the process of raising capital through the issuance of shares.
One of the reasons for raising shares is to inject capital into the company for various purposes, such as funding expansion plans, paying off debt, or investing in new projects. Raising capital through share issuances is an effective way for companies to access funds from the public markets.
An Initial Public Offering (IPO) is a type of share issuance where a company offers its shares to the public for the first time, thereby becoming a publicly traded company. IPOs provide an opportunity for the company to raise substantial capital, while also giving investors a chance to invest in a promising company and potentially benefit from its growth.