4 Different Types of Investors in an IPO: Meaning and Difference

This IPO News guide/article covers “4 Different Types of Investors in an IPO: Meaning and Difference”. The page is organized around 4 types of investors or ipo applicants, 1. retail individual investor (rii), retail investors minimum reservation, 2. non-institutional investors (niis) / high net-worth individuals (hnis), nii minimum reservation. IPO News presents the structured facts and tables in its own layout and wording.

Topics Covered

• 4 Types of Investors or IPO Applicants
• 1. Retail Individual Investor (RII)
• Retail Investors Minimum Reservation
• 2. Non-Institutional Investors (NIIs) / High Net-worth Individuals (HNIs)
• NII Minimum Reservation
• 3. Qualified Institutional Investors (QIIs) / Qualified Institutional Bidders (QIBs)
• QIB minimum Reservation
• 4. Anchor Investors
• Zerodha Trade@20
• Frequently Asked Questions
• 1. I am an NRI, which category should I apply in?−
• 2. Who are anchor investors in an IPO?+
• 3. Can a retail investor sell shares on the listing day?+
• 4. How anchor investors are different from QIBs?+
• 5. How HNI can apply in IPO?+
• 6. Are chances of allotment increases, if I apply for more than 1 lot?+
• 7. What is the difference between QIB, NII, and RII?+
• Compare Stock Brokers Side-by-Side

Key Facts

• India's trusted financial research platform since 2015. Live IPO GMP, subscription data, allotment status, Rights Issues, NCDs and unbiased stock broker reviews.
• Want to apply for an IPO, must know that there are 4 types of IPO applicants or investors while bidding for an IPO. Check out which category belongs to you or in which category, you should apply for.
• Anyone who want to subscribe to an IPO can apply for an IPO as RII, or QIB, or NII, or Anchor investor. Every IPO issue has a category reservation for each type of investor.
• Most of us from the general public are retail investors. Technically speaking, an individual who places an IPO bid for a maximum of upto Rs 2 lakh belong to this category.
• Whether you are a resident of India or a non-resident (NRI), who wants to invest less than or upto Rs 2 lakh in the IPO, should apply as a retail individual investor (RII).
• The maximum bidding amount for retail investors is capped at Rs 2 lakh.
• IPO applicants in only the retail category are allowed to bid at the cut-off price.
• For a book-building IPO, the issue must have minimum 35% retail reservation.
• In most book-building IPOs processes, the minimum retail quota is 35%. The issuer companies must have profits in the last 3 years.
• In book-building IPO via QIB route, the issue must have atleast 10% shares reserved for retail investors.
• In the case of fixed price IPO, the issue must contain 50% retail quota.
• All individuals (Resident or NRI), trusts, companies, institutions, or HUFs who subscribe to an IPO for more than Rs 2 lakh should apply as Non-institutional investors (NII).
• NIIs are further divided into small HNI and Big HNI
• Small NII (sNII): All IPO bidders who apply for an IPO from Rs 2 lakh to Rs 10 lakh is called sNII. Thus, SNII can put a maximum IPO bid of Rs 10 lakh.
• Big NII (bNII): Unlike it, high-net-worth individuals whose subscription amount is above Rs 10 lakh are known as big NII. Thus, 10 lakh is the minimum bidding amount for big HNIs.
• The minimum investment amount for HNIs / NIIs is above Rs 200,000.
• Maximum bidding amount by NIIs is restricted to Rs 10,00,000.
• IPO applicant in the NII category cannot bid at the cut-off price.
• There is no lock-in period for NIIs.
• Most of the IPOs have a 15% quota reserved for NIIs.
• The only difference between NII and QIB is that NIIs are not SEBI registered.
• NIIs have the right to withdraw or cancel the IPO bid before IPO allotment.
• Check out rules pertaining to the minimum shareholder quota for NIIs in any IPO.
• Generally, all mainboard IPOs under the book-building method have a minimum 15% of the total issue size reserved for NIIs. In this, 5% is reserved for small NIIs and 10% is for big HNIs.
• Book-building IPO issues under QIB route have a maximum or not more than 15% NII reservation.
• Fixed-price IPO issuing companies can allocate 50% of the total offering between NIIs and QIBs.
• QIB bid for an IPO with a large amount and in IPO process, underwriters try to get the maximum subscription number from QIIs.
• Only SEBI-registered institutions can apply under the QIB category.
• Not more than 50% of the IPO offer can be allocated to QIBs.
• IPO applicants in the QIB category cannot withdraw their bids, once applied.

Data Tables

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