Eligibility of Reservation for QIBs, NIIs

An IPO has to adhere to specific guidelines of SEBI to offering shares to eligible investors as well as the percentage pf sjhares that can be offered to them. The details of reservation in IPO and percentage that can be allocated to each category is given here.

Eligible categories of investors and reservation for each class

As per SEBI guidelines, the eligible investors in an IOO are broadly classified under three categories namely, QIBs (Qaulified Institutionsl Buyers), NIIs (Non-Institutional Investors), and RIIs (Retail Institutional Investors). The eligible reservation for each category depends on the type of the IPO whether it is a Fixed Price IPO or a BOOK Built IPO.

What is the reservation of eligible investors in different types of IPO?

As per SEBI guidelines, the eligible investors in an IOO are broadly classified under three categories namely, QIBs (Qaulified Institutionsl Buyers), NIIs (Non-Institutional Investors), and RIIs (Retail Institutional Investors). The eligible reservation for each category depends on the type of the IPO whether it is a Fixed Price IPO or a BOOK Built IPO.

What is the reservation of eligible investors in different types of IPO?

Reservation for eligible investors in Fixed Price IPO –
Minimum reservation for RII category investors – 50% of the net public offer for allotment
Balance 50% of the net offer to be made to
individual applicants other than RII
Other investors can include
corporate bodies/ institutions irrespective of the number of securities applied for.

Reservation for eligible investors in Book-Built IPO –
The book built IPO can be a voluntary book-built IPO and a compulsory book-built IPO. the resevation for eligible investors in each type of book-built IPO is highlighted below.

Voluntary Book-Buily IPO
Reservation for eligible investors in this type of IPO
Qualified Institutional Buyer/ Investor – Maximum 50% of the net offer made to the public
Non-Intitutional Investors – Minimum 15% of the net offer made to the public
Retail Institutional Investors – Minimum 35% of the net offer made to the public

Compulsory Book-Built IPO
Reservation for eligible investors in this type of IPO
Qualified Institutional Buyer/ Investor – Minimum 75% of the net offer made to the public. If this condition is not met, full amount is to be refunded by the issuer
Non-Intitutional Investors – Maximum 15% of the net offer made to the public
Retail Institutional Investors – Maximum 10% of the net offer made to the public