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Allocations in an IPO
Fixed price IPOs
There are two
buckets in the fixed
price IPOs:
Investors applying
for Rs. 1, 00,000 or
more and Investors
applying for upto
Rs.1, 00,000.
Bookbuilding IPOs
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. In
case the book built
issues are made
pursuant to the
requirement of
mandatory allocation
of 60% to QIBs in
terms of Rule 19(2)
(b) of SCRR, the
respective figures
are 30:10:60.
Definition of
Retail Individual
Investors (RIIs)
‘Retail individual
investor’ means an
investor who applies
or bids for
securities of or for
a value of not more
than Rs.1, 00,000.
Definition of Non
Institutional
Investors (NIIs)
All applicants,
other than QIBs or
individuals applying
for less than Rs. 1,
00,000 are
considered as NIIs.
Typically, this
category includes
High Net Worth
Individuals (HNIs)
and corporate
bodies.
Definition of
Qualified
Institutional Buyers
(QIBs)
QIBs are those
institutional
investors who are
perceived to possess
expertise and the
financial strength
to evaluate and
invest in the
capital markets. A
QIB is defined by
SEBI as
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a. |
public financial
institution as
defined in
section 4A of
the Companies
Act, 1956; |
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b. |
scheduled
commercial
banks; |
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c. |
mutual
funds; |
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d. |
foreign
institutional
investor
registered with
SEBI; |
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e. |
multilateral
and bilateral
development
financial
institutions; |
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f. |
venture
capital funds
registered with
SEBI. |
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g. |
foreign
Venture capital
investors
registered with
SEBI. |
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h. |
state
Industrial
Development
Corporations. |
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i. |
insurance
Companies
registered with
the Insurance
Regulatory and
Development
Authority
(IRDA). |
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j. |
provident
Funds with
minimum corpus
of Rs. 25 crores |
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k. |
pension
Funds with
minimum corpus
of Rs. 25
crores) |
These entities are
not required to be
registered with SEBI
as QIBs. Any
entities falling
under the categories
specified above are
considered as QIBs
for the purpose of
participating in
primary issuance
process.
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