What is the difference between a retail investor and a non-institutional bidder?
Kandra asks:
Getting more to the point, can anyone be a non-institutional bidder or is there something you need to do to be one? For example with the recent Reliance Power IPO, retain investorts can invest up to 1lac while non-institutional bidders can bid more. Is the only difference the amount they invest?
Getting more to the point, can anyone be a non-institutional bidder or is there something you need to do to be one? For example with the recent Reliance Power IPO, retain investorts can invest up to 1lac while non-institutional bidders can bid more. Is the only difference the amount they invest?
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Investors can apply for shares in an IPO in 4 different categories:
1. Retail Individual Investor (RII)
In retail individual investor category, investors can not apply for more then Rs one lakh (Rs 1,00,000) in an IPO. Retail Individual investors have an allocation of 35% of shares of the total issue size in Book Build IPO’s.
NRI’s who apply with less then Rs 1,00,000 /- are also considered as RII category.
2. High Networth Individual (HNI)
If retail investor applies more then Rs 1,00,000 /- of shares in an IPO, they are considered as HNI.
3. Non-institutional bidders
Individual investors, NRI’s, companies, trusts etc who bid for more then Rs 1 lakhs are known as Non-institutional bidders. They need not to register with SEBI like RII’s. Non-institutional bidders have an allocation of 15% of shares of the total issue size in Book Build IPO’s.
4. Qualified Institutional Bidders (QIB’s)
Financial Institutions, Banks, FII’s and Mutual Funds who are registered with SEBI are called QIB’s. They usually apply in very high quantities.
QIB’s have an allocation of 50% of shares of the total issue size in Book Build IPO’s.
In a book built issue allocation to Retail Individual Investors (RIIs), Non Institutional Investors (NIIs) and Qualified Institutional Buyers (QIBs) is in the ratio of 35:15: 50 respectively.