The Three IPO Investor Categories
SEBI requires every book-built IPO to reserve shares for three distinct investor types. This ensures broad participation across institutional and individual investors.
1. QIB — Qualified Institutional Buyers
Who they are: Mutual funds, foreign institutional investors (FIIs), banks, insurance companies, venture capital funds.
IPO quota: 50% of the issue (75% for anchor allotment + remaining QIB quota)
Why they matter: QIB demand is the most reliable signal. These are sophisticated investors with large research teams. When QIBs subscribe 100x+, it's a strong vote of confidence in the company.
2. NII — Non-Institutional Investors (HNI)
Who they are: Any individual or entity applying for more than ₹2 lakh (but not qualified as QIB).
IPO quota: 15% of the issue
Allotment method: Proportional (more lots = higher chance and more shares)
Note: The NII category is often subscribed 200x–500x in popular IPOs. Investors sometimes take bank loans to apply with crores of rupees.
3. RII — Retail Individual Investors
Who they are: Any individual applying for up to ₹2 lakh.
IPO quota: 35% of the issue
Allotment method: Computerized lottery — maximum 1 lot per applicant
Anchor Investors
Before the IPO opens, companies can allot up to 60% of the QIB portion to anchor investors (large institutions). These are allotted at the cap price with a 30-day lock-in. Anchor allotment is a quality signal.
Reading Subscription to Gauge Demand
- QIB subscription is the most meaningful — follow it closely on Day 3
- Retail subscription 10x+ means good small investor demand
- NII 100x+ usually indicates leveraged HNI bets — take with some caution
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