In the realm of securities offerings, investors play a crucial role, and they are typically classified into three distinct categories, each with its unique characteristics and allocation criteria:
Types of Investors
1. Qualified Institutional Buyers (QIB):
Qualified Institutional Buyers encompass prominent entities in the financial landscape, such as significant investment firms, mutual funds, and scheduled commercial banks, among others, duly registered with the Securities and Exchange Board of India (SEBI). In the context of a book-built issue, no more than 50% of the securities are reserved for QIBs. For compulsory book-built issues, a minimum of 75% of the securities is set aside for this category.
2. Retail Individual Investor (RII):
Retail Individual Investors constitute individual investors who participate by applying or placing bids for shares, with the cumulative value not exceeding 2 lakh rupees. In book-built issues, a minimum allocation of 35% of shares is designated for the RII category, while for compulsory book-built issues, the allocation does not exceed 10%. In the case of a fixed-price issue, a minimum of 50% of shares is earmarked for retail individual investors.
3. Non-Institutional Investors:
Non-Institutional Investors encompass a diverse group, excluding QIBs and retail investors. This category includes High Net Worth Individuals (HNIs) and corporate bodies. For book-built issues, a reserved allocation of at least 15% of stocks is dedicated to non-institutional investors. In the context of compulsory book-built issues, the allocation does not surpass 15%.