The Three Investor Categories
SEBI divides IPO investors into distinct categories, each with reserved quota:
- QIB (Qualified Institutional Buyers): 50% of net issue — mutual funds, banks, FPIs, insurance companies. Minimum investment ₹10 lakh (no upper limit). No refund if oversubscribed.
- HNI / NII (Non-Institutional Investors): 15% of net issue — individuals applying above ₹2 lakh. Proportional allotment, not lottery.
- Retail Individual Investors (RII): 35% of net issue — individuals applying up to ₹2 lakh. Lottery-based allotment if oversubscribed.
Reading Subscription Numbers
Subscription data updates 3 times daily during the IPO window (9:30 AM, 1 PM, 5 PM on BSE/NSE). A "5× subscription" means 5× more bids than shares available in that category.
What each number tells you:
- QIB 50×+: Very strong institutional conviction. Almost always positive for listing.
- HNI 30×+: Investors using leverage (bank funding) to bid. High HNI subscription drives high GMP but can lead to selling on listing when they repay loans.
- Retail 2×-5×: Normal. Below 1× means the IPO may struggle to fully subscribe.
Day-Wise Subscription Pattern
Day 1 subscriptions are typically lowest. Institutions and HNIs often bid on Day 2-3. Retail investors pile in on the last day after GMP rises. A strong Day 1 subscription (especially QIB on Day 1) is exceptionally bullish.
Traps to Avoid
- HNI-led subscription: Leverage-funded HNI bids inflate subscription. Post-listing, loan repayment forces selling. Look for QIB conviction to validate.
- SME IPOs: 200× subscription looks exciting but is often from operators. Always check QIB participation and anchor quality.