The Complete IPO Guide for Indian Investors · Chapter 4 of 15
Who Can Apply for an IPO?
The investor categories
Public issues reserve portions for different kinds of investors. Qualified Institutional Buyers (QIBs) are institutions such as mutual funds, insurers, banks and foreign portfolio investors. Non-Institutional Investors (NIIs) are individuals, trusts and companies bidding above a limit. Retail Individual Investors (RIIs) are individuals bidding up to ₹2 lakh. Some issues also reserve shares for employees or for existing shareholders of a parent company.
The usual split
For a standard book-built issue, no more than half goes to QIBs, at least 15% to NIIs and at least 35% to retail. The non-institutional portion is further divided by bid size into small NII (₹2 lakh to ₹10 lakh) and big NII (above ₹10 lakh). The exact split for each issue is printed in its offer document.
Anchor investors
Before the issue opens, up to 60% of the QIB portion can be allotted to anchor investors, which are large institutions that bid at a fixed price a day before opening. Anchors accept a lock-in on their shares, and their presence is often read as a vote of confidence. A later chapter explains how to use the anchor list.
What you need
A PAN-linked demat account, a bank account, and either a UPI ID linked to that bank account or an ASBA-enabled net-banking login. You can apply once per PAN in a category. Applying twice with the same PAN in one category leads to rejection of the duplicate.
Which category should you use?
If your total bid is up to ₹2 lakh, retail is normally the right choice, because that quota is reserved for individuals and the minimum allotment per winner is one lot. Bids above ₹2 lakh must go in the NII category, where allotment is proportionate rather than a lottery. Family members can apply with their own PAN and demat accounts, but an account must never be used for someone else's application.
Key takeaways
- Retail means a bid of up to ₹2 lakh.
- A demat account, bank account and UPI or ASBA are required.
- One application per PAN per category.
- Anchor investors bid a day before the issue opens.