The reason that people who subscribe to the same IPO end up with different share counts is that the allotment method splits into two tracks: equal allotment and proportional allotment. Equal allotment divides the same share count among all participants who put in at least the minimum subscription unit. Proportional allotment distributes shares proportionally based on the size of the deposit submitted. Half of any IPO subscription strategy starts with accurately understanding the arithmetic of these two structures.
How the Shares Are Divided — Half by Headcount, Half by Deposit
Under the current rules, at least 50% of the shares allocated to general subscribers are distributed through equal allotment. As summarized by KB Think, equal allotment divides the same number of IPO shares equally among all applicants who submitted at least the minimum subscription deposit. The remaining portion is allocated as proportional allotment based on the size of the deposit and the subscription competition ratio.
The differences between the two methods are summarized in the following table.
| Category | Equal Allotment | Proportional Allotment |
|---|---|---|
| Allotment basis | Number of subscription entries (1/N distribution) | Deposit size × competition ratio |
| Minimum requirement | Deposit for minimum subscription unit (typically 10 shares) | No limit — the more you deposit, the better |
| Advantages for | Small-amount subscribers | Subscribers who can mobilize larger deposits |
| Share of total | 50%+ of general subscriber allocation | The remainder |
Before this structure was introduced, the system was purely proportional — those who deposited more took most of the shares. The mandatory equal allotment was a policy change to broaden participation opportunities for small investors, and as a result today's subscription is a field where "the participation game" and "the capital game" are mixed in roughly equal halves.
Equal allotment is a participation game; proportional allotment is a capital game — mixing the rules of both when calculating expected share counts will get the numbers wrong from the start.
The Arithmetic of the Minimum Deposit — How Much Does a 10-Share Subscription Cost?
The subscription deposit is a security deposit paid upfront as an expression of intent to buy shares; the standard deposit rate is 50%. Using the example from KB Think, if you apply for 100 shares in a company with an IPO price of 10,000 won, you must place half — 500,000 won — in your account as a deposit.
The minimum cost to participate in equal allotment follows the same arithmetic. If the minimum subscription unit is 10 shares and the IPO price is 10,000 won, the deposit is 50,000 won. That 50,000 won effectively purchases a lottery ticket for the equal allotment pool, so for small investors, equal allotment offers the highest expected shares per won deployed. However, since remaining deposits are returned on the refund date, the cash tie-up between the subscription period and the refund date must be factored in.
The arithmetic on the proportional side is straightforward. If the proportional competition ratio is N-to-1, roughly 1 share is allocated for every N shares subscribed. For a popular stock with a 1,000-to-1 competition ratio, you need a deposit equivalent to 1,000 shares to receive 1 share — at an IPO price of 10,000 won, you would need to deposit 5 million won to receive 1 share.
Conditions for a Zero-Share Allotment — Equal Allotment Is Also a Lottery
Equal allotment is not a structure where "participation guarantees shares." When the number of subscription entries exceeds the equal allotment pool, the per-person allotment drops below 1 share, at which point a lottery determines who receives shares and who does not. This is why even equal allotment participants in popular IPOs can end up with zero shares when the minimum-unit subscribers flood in.
A method for estimating your expected allotment in advance is laid out by Samsung Securities' guide. Two numbers are key: for the equal side, divide the equal allotment pool by the number of subscription entries to get the expected per-person allotment; for the proportional side, divide your subscription quantity by the proportional competition ratio. Real-time competition ratios published by securities firms just before the subscription deadline allow rough estimates of both figures.
For issues underwritten by multiple securities firms, differences in competition ratios between firms are also a variable. For the same stock, equal allotment expected counts can be higher at a firm with fewer subscription entries — which firm you place your account with can determine the result. Since you can only subscribe through one securities firm per issue, the judgment of which window is most advantageous must come first.
What to Watch
Here is a checklist of items to confirm before pressing the subscribe button.
- Check the ratio of equal allotment to proportional allotment within the general subscriber allocation in the securities registration statement.
- Calculate the minimum participation cost using the minimum subscription unit (typically 10 shares) and the deposit rate (typically 50%).
- Estimate the expected equal allotment count (equal pool ÷ number of subscription entries) using the real-time competition ratio on the subscription deadline day.
- For issues with multiple underwriters, compare subscription entry counts by firm and choose the most favorable window.
- Confirm the fund tie-up period until the refund date and check the source of subscription funds (existing balance or margin account).
- Check the proportion of freely tradable shares at listing in the securities registration statement — post-listing supply dynamics are just as important as the allotment itself.