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IPO investor categories: retail, S-HNI, B-HNI and QIB
By InvestorTrack team · Last reviewed · 7 min read
An IPO is not one pool of shares. The shares on offer are divided into categories of investors, each with its own share of the issue and its own way of being allotted. That is why subscription is reported separately for QIB, NII and retail, and why a bid of ₹1.9 lakh and a bid of ₹2.1 lakh are treated very differently.
The main categories
These are the usual limits for a company that meets the profit track-record rules. An issue by a company that does not, for example one that is loss-making, follows a different split: more for QIBs and much less for retail. The exact split for each IPO is in its offer document and shown on the IPO's page. Some issues also reserve a small part for employees or existing shareholders.
NII: S-HNI and B-HNI
The non-institutional category is split in two by the size of the bid:
- S-HNI (small HNI): bids above ₹2 lakh and up to ₹10 lakh.
- B-HNI (big HNI): bids above ₹10 lakh.
SEBI reserves one third of the NII portion for S-HNI and two thirds for B-HNI, so each has its own subscription figure. Reading them separately shows who is driving the NII number, because the two can move very differently. Large bids from a few big investors can lift the B-HNI number while the S-HNI number stays low.
The ₹2 lakh line
The category depends on the size of your bid, not on who you are. A bid of up to ₹2 lakh is retail. A bid of ₹2.1 lakh is S-HNI and is allotted in a different way, with a different level of oversubscription. The amount is worked out at the upper price of the band. The application amount calculator shows which category a bid falls into, and the most lots a retail bid can hold.
Anchor investors
Before the issue opens to the public, a part of the QIB portion, up to 60% of it, can be allotted to anchor investors, which are large institutions. They bid a working day earlier at a price within the band. Their participation tells the market that some large investors accepted the price, and it sets the issue price floor for the day. Anchor shares are locked in: half for 30 days after allotment and the other half for 90 days, for issues opening on or after 1 April 2022. When a lock-in ends, more shares can come into the market, so it is a date some investors watch.
Why subscription is reported by category
Each category is subscribed independently: retail demand cannot fill the QIB portion, and the reverse. A total of 12x can hide a retail category at 3x and a QIB category at 40x. So the headline figure is only the start. The subscription page and each IPO's Subscription tab show every category, with the S-HNI and B-HNI split when the source gives it. How to read IPO subscription numbers explains what to look for.
The category also decides your chance of getting shares. Each IPO's Allotment tab shows a rough chance for retail and HNI bids from the subscription figures. See how the allotment lottery works.
SME IPOs
SME IPOs have their own category structure and much larger minimum bids. See SME IPO versus mainboard IPO.
Frequently asked questions
What are QIB, NII and retail in an IPO?
They are the investor categories. QIBs are large institutions, NIIs are investors bidding above ₹2 lakh, and retail investors bid up to ₹2 lakh. Each has its own share of the issue and its own subscription figure.
What is the difference between S-HNI and B-HNI?
Both are part of the non-institutional category. S-HNI is a bid above ₹2 lakh and up to ₹10 lakh, and B-HNI is a bid above ₹10 lakh. SEBI reserves one third of the NII portion for S-HNI and two thirds for B-HNI.
How much of an IPO is reserved for retail investors?
For a company that meets the profit track-record rules, at least 35% of the issue. For other issues, such as a loss-making company, the retail share can be much lower, even 10%. The exact split is in the offer document.
Who are anchor investors?
Large institutional investors that are allotted a part of the QIB portion, up to 60% of it, a day before the issue opens. Half of their shares are locked in for 30 days and half for 90 days.
Does the category change my chance of getting shares?
Yes. Each category is subscribed and allotted on its own, so a category that is subscribed 50 times is far harder to get shares in than one subscribed 3 times, whatever the total subscription is.