What is the difference between RII, NII, QIB and Anchor Investor?

Investors can apply for shares in one of the following categories:

1. Retail Individual Investor (RII)

   • Resident Indian Individuals, NRIs and HUFs who apply for less than Rs 2 lakhs in an IPO under RII category.
   • Not less than 35% of the Offer is reserved for RII category.
   • NRI or HUF who appling in an IPO with less than Rs 2,00,000 can apply in RII category.
   • RII category allows bid at cut-off price.
   • Allotment Basis
     • If IPO doesn't get over-subscribed in RII Category, full allotment to all applicants.
     • If IPO is oversubscribed in this category - The allotment is taken place via lottery if the retail portion is oversubscribed, and applicants will receive at least one lot regardless of how many lots they have applied for.

       For example, if the IPO subscribed 2 times (application-wise) in the retail category, 1 out of 2 applicants will get 1 lot irrespective of how many shares they applied for.

       If investor A applied for Rs 2 lakhs (15 lots), investor B applied for 1 lot and investor C applied for Rs 1 lakh (7 lots) in an IPO at a cut-off price. If IPO is subscribed 3 times (application-wise) in the Retail Category, the allotment will be done through the lottery and only 1 of 3 applicants will get 1 lot allocated. It doesn't matter how many shares they have applied.

   • Retail and non-institutional bidders a re permitted to withdraw their bids until the day of allotment.
   • Note:
     • Always apply at cut-off price in this category.
     • If IPO oversubscribe, apply only 1 lot per IPO application.
     • To maximize the allotment, apply though multiple accounts on your family members name.

2. Non-institutional bidders (NII)

   • Resident Indian individuals, NRIs, HUFs, Companies, Corporate Bodies, Scientific Institutions, Societies, and Trusts who apply for more than Rs 2 lakhs of IPO shares fall under the NII category.
   • Not less than 15% of the Offer is reserved for the NII category.
   • A high Net-worth Individual (HNI) who applies for over Rs 2 Lakhs in an IPO falls under this category.
   • Non-institutional bidders are not permitted to withdraw their bids once placed. They could modify the bid price.
   • NIIs are not eligible to bid at the cut-off price.
   • NII need not register with SEBI.
   • NII Sub-categories

     NII category has two subcategories:

     1. sNII or sHNI (bids below Rs 10L)

        The Small NII category is for NII investors who bid for shares between Rs 2 lakhs to Rs 10 lakhs. The 1/3 of NII category shares are reserved for the Small NII sub-category. This subcategory is also known as Small HNI (sHNI).

     2. bNII or bHNI (bids above Rs 10L)

        The Big NII category is for NII investors who bid for shares worth more than Rs 10 Lakhs. The 2/3 of NII category shares are reserved for the Big NII subcategory. This subcategory is also known as Big HNI (bHNI).

   • sNII or sHNI Allotment Basis
     • If IPO doesn't get over-subscribed in the sNII sub-category, full allotment to all applicants in the sNII category.
     • If IPO is oversubscribed in the sNII sub-category, the allotment to each investor shall not be less than the minimum application size (~Rs 2 Lakhs), subject to the availability of Equity Shares in the sNII Portion.
     • This is similar to allotment in the RII category but instead of 1 lot, the sNII investor gets shares worth of minimum application size which is just above Rs 2 lakhs.
     • Example: if the IPO subscribed 2 times (application-wise) in the sNII sub-category, 1 out of 2 applicants will get the minimum sHNI application (worth around Rs 2 Lakhs) irrespective of how many shares they applied for.
   • bNII or bHNI Allotment Basis
     • If IPO doesn't get over-subscribed in the bNII sub-category, full allotment to all applicants in the bNII category.
     • If IPO is oversubscribed in the bNII sub-category, the allotment to each investor shall not be less than the minimum sNII application size (~Rs 2 Lakhs), subject to the availability of Equity Shares in the bNII Portion.
     • This is similar to allotment in the RII category but instead of 1 lot, the bNII investor gets shares worth of minimum application size which is just around Rs 2 lakhs.
     • Even though the investment limit for Big HNI is more than or equal to Rs 10 lakhs, the investors will receive shares worth Rs 2 lakhs on a lottery basis (same as for Small HNI).

3. Qualified Institutional Bidders (QIB's)

   • Public financial institutions, commercial banks, mutual funds and Foreign Portfolio Investors ect can apply in QIB category. SEBI registration is required for institutions to apply under this category.
   • 50% of the Offer Size is reserved for QIB's
   • Allotment Basis - Proportionate.
   • QIBs are mostly representatives of small investors who invest through mutual funds, ULIP schemes of insurance companies and pension schemes.
   • QIB's are prohibited by SEBI guidelines to withdraw their bids after the close of the IPOs.
   • QIB's are not eligible to bid at cut-off price.

4. Anchor Investor

   • An anchor investor in a public issue refers to a qualified institutional buyer (QIB) making an application for a value of Rs 10 crores or more through the book-building process. An anchor investor can attract investors to public offers before they hit the market to boost their confidence.
   • Up to 60% of the QIB Category can be allocated to Anchor Investors;
   • Anchor Investor Offer Price is decided separately.
   • Anchor investor's has different Anchor Investor Bid/Offer Period.
   • The minimum application size for each anchor investor should be Rs 10 crores. No merchant banker, promoter or their relatives can apply for shares under the anchor investor category. In offers of size less than Rs 250 crores, there can be a maximum of 15 anchor investors, but in those over Rs 250 crores, SEBI recently removed the cap on the number of anchor investors.
   • Anchor investor's are not eligible to bid at cut-off price.