Qualified Institutional Buyer
Also called: QIB · Topic: Financial Markets, Instruments, Insurance and Pensions · NCERT: Beyond NCERT
Meaning
A Qualified Institutional Buyer (QIB) is a large institution that is judged expert enough to study and invest in capital-market securities on its own. Examples are banks, mutual funds, insurance companies, foreign portfolio investors (FPIs) and pension funds. Since they need less protection than small investors, SEBI gives QIBs special routes. In a book-built IPO, QIBs can get up to 50% of the shares. A listed company can also raise money from QIBs alone through a Qualified Institutional Placement (QIP), which is quicker than a public issue.
Example
In a book-built IPO, up to half the shares may go to QIBs such as LIC, mutual funds and FPIs. At least 35% goes to retail investors and at least 15% to non-institutional investors.
Don't confuse with
- Anchor investor: a QIB that gets shares one day before the IPO opens. Anchors can take up to 60% of the QIB portion, and their shares are locked in: 50% for 30 days and 50% for 90 days. Every anchor investor is a QIB, but most QIBs are not anchors.
Related concepts
- Primary market
- Initial Public Offering
- Red herring prospectus
- Book building
- Anchor investor
- Application Supported by Blocked Amount
- Green shoe option
- Underwriting
- Grey market premium
- Follow-on Public Offer