Tradebulls

Tradebulls Online Share Trading

Difference between Retail, Non-institutional, Anchor and QIB Bidders

Difference between Retail, Non-institutional, Anchor and QIB Bidders

The distinction between retail, non-institutional investors and QIBs is meant more to reach out to different types of audiences. In a book built issue, there is a separate quota that is assigned to each of these categories. Any under-subscription in any of these categories can be made up by allocation to another category where there is an oversubscription.

What role does each of these categories of investors play?

The QIB portion is allocated to the qualified institutional buyers (QIB) and the allocation is 50% in case of book built issues. This segment of institutional investors include the mutual funds, insurance companies, global portfolio managers, registered FIIs, sub accounts of FIIs, sovereign funds, endowment funds, college superannuation funds etc. They act like anchor investors in most cases and the actual price determination will be done based on the QIB demand. The retail demand is more about the broad based appetite for the issue and the retail spread of ownership. The non-institutional segment is the HNI demand emanating from informed and savvy investors.

How the 3 categories of investors interplay in an IPO?

Role of QIBs
The QIB portion is the institutional portion which includes investors from the domestic and the foreign fund managers. Only entities registered with SEBI as institutional investors can invest in this quota. The book built issues have a 50% quota of an issue reserved for the QIB portion and this allocation is entirely done on a discretionary basis depending on oversubscription.

QIB advantage
The QIB investors are only required to put up 10% of the total application amount in any book built IPO as their share of the margin and the balance is payable only when the actual allotment is finalized. This enables QIBs to use money more efficiently. QIB investments act like a guide for the other categories of investors and are also the key to the IPO’s global profile.

Retail Allocation
In any book built issue, the retail portion has a 35% allocation of the total issue size. Retail investors are defined as any investment up to Rs.2 lakhs in a single issue and under a single DP id. Retail investors can apply for the IPO either offline or they can also apply online using their internet trading account to map with DP id. DP account is a must for IPO application.

Popularity gauge
Retail investor portion is important to any IPO as it shows the popular acceptance of the IPO story. This reflects the genuine demand that the company’s IPO has been able to generate and is important to companies as it helps them to broad base their investor base. Retail investors have to put the entire money upfront but now SEBI permits retail investors to use the ASBA facility. Under the Applications Supported by Blocked Amounts (ASBA), the bank account to the retail investors only gets blocked to the tune of the application amount. On the date of allotment, only the allotment money is debited and the block on the balance amount is automatically released.

Represents HNI demand
The non-institutional portion includes all other investors other than the category of retail and QIBs. Thus this portion will include HNIs investing above Rs. 2 lakhs per application, corporates, bodies’ corporates, private limited companies, NBFCs etc. They basically represent the demand coming from more informed investors.

IPO funding demand
The non-institutional portion is also known as the HNI portion and it has a 15% allocation to the entire IPO. This segment normally relies on IPO funding and banks also are willing to lend against IPO applications based on a small margin. Since HNI investors incur a huge cost of funding, they expect attractive listing to actually make money from the IPO.

How the categorization works in case of fixed price IPOs?

Fixed price IPOs are very uncommon these days as most of the issues prefer to get their IPO price discovered through the book building route only. There are 3 things you need to know here -

  • In a fixed price issue the categorizations are slightly different. There is a 50% quota for applications less than Rs.1 lakh and the balance is allocated to investments above Rs.1 lakh. Institutions and HNIs find this allocated skewed against them hence they are not too keen on fixed price issues for this reason.
  • In a fixed price issue, there some other advantages in this categorization. For example, there is no benefit of ASBA available in fixed price issues for the retail investors. Unlike in book built issues, the institutional investors are also required to pay up 100% of the total application at the time of application, which makes it uneconomical for most institutions.
  • That is the principal reason, why most issuers and all the 3 categories of investors prefer the book built route to an IPO.
Offer

OPEN DEMAT ACCOUNT

Open your Demat and Trading Account with Tradebulls

Start Trading in Equity, Commodities and Currency Today!

Submit
  • attention investors
"Prevent Unauthorized transactions in your Trading/Demat Account --> Update your mobile numbers/email IDs with your stock brokers/Depository Participant. Receive alerts/information of your transaction/all debit and other important transactions in your Trading/ Demat Account directly from Exchange/CDSL at the end of the day .......... Issued in the interest of investors." | "KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary." | "No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorize your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account." |"Investment in Securities Market/Commodity Market is subject to Market Risk. | RGESS investors kindly download New Retail Investor Certificate from link - https://www.cdslindia.com/investors/rgessverification.aspx | Dear Investor kindly update Aadhar Number with your demat account, contact your nearest branch."
TRADEBULLS SECURITIES PRIVATE LIMITED
Corporate Office: Kanakia Wall Street, A-Wing, Ground Floor, Andheri-Kurla Road, Andheri (East), Mumbai - 400093. (022) 4000 1000 / 6165 5555
Central Support Office: Tradebulls House, Sindhubhavan Road, Bodakdev, Ahmedabad - 380 054.(079) 4000 1000.
SEBI Registration No: INZ000171838 | NSE Member Id-13499 | BSE Member ID-3286 | MSEI Member ID-77100 | MCX Member ID - 21840 | NCDEX Member ID - 00376 |
CDSL Registration No: IN-DP-206-2016 | PMS Reg. No: INP000005463 | Research Analyst No: INH000004486 | AMFI Reg. No: ARN-82359 | CIN: U93000DD2009PTC004753
Authorization: Please note that by submitting the above mentioned details, you are authorising us to call & email you even though you may be registered under DNC
Disclaimer: Terms & Conditions: Please note that by submitting the above mentioned details, you are authorising us to call you even though you may be registered under DNC.
Customer Support/ Grievance / Correspondence Office Ahmedabad: Tradebulls House, Sindhubhavan Road, Bodakdev, Ahmedabad, India -380054
Telephone No: +91-079-40001000,+91-079-33333333  | Email: wecare@tradebulls.in
Copyright © 2018 Tradebulls.in
Designed, Developed & Content Powered by   Accord Fintech Pvt. Ltd.