An IPO is not one pool. It is divided into reserved buckets, and the rules differ in each.
The three main categories
QIB — Qualified Institutional Buyers. Mutual funds, insurance companies, banks, pension funds, foreign portfolio investors and similar registered institutions. Typically the largest reserved portion in a book-built issue.
NII — Non-Institutional Investors (also called HNI). Individuals and entities applying for more than ₹2 lakh. Now generally split into two sub-buckets: applications between ₹2 lakh and ₹10 lakh, and applications above ₹10 lakh, each with its own reserved share.
RII — Retail Individual Investors. Individuals applying up to ₹2 lakh. This is where almost every ordinary investor sits.
Some issues also reserve a portion for employees (often at a discount) and, in certain cases, for existing shareholders of a listed parent company.
Why the category matters: how allotment is calculated
This is the part that genuinely affects you.
In the QIB category, allotment is at the discretion of the issuer and bankers, on a proportionate basis within the rules. Institutions receive a proportion of what they bid.
In the NII category, allotment when oversubscribed is on a draw-of-lots basis within the sub-categories, with a minimum application size defined. A larger application does improve the expected number of lots here, which is why the category behaves differently from retail.
In the retail category, the rule is the one that surprises people:
When the retail category is oversubscribed, every successful applicant gets exactly one lot, and the winners are chosen by a computerised lottery.
Retail portion: 10,00,000 shares. Lot size 50 shares → 20,000 lots available.
Retail applications received: 1,00,000 applications.
The category is five times oversubscribed. A computerised draw picks 20,000 applications. Each one gets exactly one lot of 50 shares. The other 80,000 applicants get nothing.
Someone who applied for one lot and someone who applied for thirteen lots both had, in effect, one entry each in terms of getting something.
Multiple applications
One PAN, one application per category, per issue. Applying more than once under the same PAN gets all your applications rejected, not just the extras.
Families do legitimately apply separately — each adult family member with their own PAN, own demat account and own bank account may apply in their own name. Each is a separate applicant with a separate lottery entry. The key requirement is that the PAN, the demat account's first holder and the bank account genuinely belong to that individual.
Anchor investors
The day before the issue opens to the public, the company may allot shares to anchor investors — large institutions, at a price fixed in advance, from within the QIB portion.
Anchors exist to give the issue credibility and a stable base of committed holders. They are subject to a lock-in, structured so that a portion of their shares is released relatively soon after listing and the remainder later.
The anchor book is published before public bidding opens. It is worth a look:
- Which institutions participated? Recognised long-term domestic mutual funds and insurers committing meaningfully is a more useful signal than a list of unfamiliar names.
- What price did they pay? Anchors commonly pay at or near the upper end of the band.
A note on what the numbers mean
Live subscription data during the issue shows each category separately. Beginners often read the overall figure. The category figures are more informative:
- A strong QIB number means institutions with research teams committed capital.
- A very high NII number with weak QIB interest sometimes reflects short-term listing-gain positioning rather than a considered view of the business.
None of this is a reliable predictor of how the stock performs after listing. It is context, not a signal.
Key takeaways
- Retail is applications up to ₹2 lakh; above that you are in the non-institutional category.
- In an oversubscribed retail category, allotment is by lottery and each winner receives exactly one lot.
- Applying for extra lots does not improve your odds of getting something in a hot retail IPO.
- One PAN, one application per category — duplicates get every application rejected.
- Anchor investors are allotted a day early with a lock-in, and the lock-in expiry is a scheduled, predictable event.
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