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Quick AnswerInstitutional investors in an IPO include mutual funds, foreign portfolio investors, insurance companies, and pension funds. Under SEBI rules, they are classified as Qualified Institutional Buyers (QIBs). Their heavy participation is usually a strong signal of confidence in the company.
When a company goes public, shares are divided among different investor categories:
Institutional investors handle massive pools of money. In most mainboard IPOs, 50% of the issue size is reserved for QIBs. Because they have expert analysts and conduct deep due diligence, high subscription in the QIB category is often viewed as a positive indicator by retail investors.
Anchor investors are a subset of QIBs who are invited to invest in the IPO a day before it opens to the public. They invest at a fixed price and are subject to a lock-in period, providing 'anchor' stability to the issue.
No, retail investors can only apply in the RII category. QIBs are registered financial institutions.
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