Difference Between RII, NII, QIB and Anchor Investor in IPO

When you apply for an IPO, you often hear terms like RII, NII, QIB, and Anchor Investor. These are different categories of investors defined by SEBI, and each has its own eligibility rules, investment limits, and quota allocation.

Understanding these categories is important because IPO allotment rules, application size, and chances of getting shares depend on the category you apply under.

Let’s break it down in simple terms.

1. Retail Individual Investor (RII)

Who they are:
Individual investors applying for shares worth up to ₹2 lakh in an IPO.

Key Features:

• Investment limit: Up to ₹2,00,000 per IPO
• Reserved quota: 35% of the net issue (in most mainboard IPOs)
• Allotment: Mostly through lottery system if oversubscribed
• Cannot bid above ₹2 lakh in this category
• Includes salaried individuals, traders, small investors

Best For: Small investors looking to participate in IPOs with limited capital.

2. Non-Institutional Investor (NII) / HNI (High Net-worth Individual)

Who they are:
Investors who apply for more than ₹2 lakh in an IPO.

This category is further divided into:

• Small HNI (sNII): ₹2 lakh to ₹10 lakh
• Big HNI (bNII): Above ₹10 lakh

Key Features:

• Reserved quota: 15% of the net issue
• No upper investment limit
• No lottery system like retail; allotment is proportional
• Often apply using funding (IPO financing)

Best For: High net-worth individuals seeking larger allocations.

3. Qualified Institutional Buyers (QIB)

Who they are:
Large financial institutions registered with SEBI.

Examples:

• Mutual Funds
• Insurance Companies
• Banks
• Foreign Portfolio Investors (FPIs)
• Pension Funds

Key Features:

• Reserved quota: 50% of the net issue
• No fixed upper investment limit
• Considered financially sophisticated investors
• Cannot withdraw bids after issue closure (with some exceptions)

Why Important?
High QIB subscription is often seen as a positive signal about IPO quality.

4. Anchor Investors

Anchor investors are actually a subset of QIBs.

Who they are:
Institutional investors who invest in the IPO one day before it opens to the public.

Key Features:

• Allocation out of the QIB quota
• Must invest at least ₹10 crore (generally)
• 30-day lock-in for 50% of shares
• 90-day lock-in for remaining 50% (as per latest norms)

Why Important?
Strong anchor participation builds confidence and improves IPO sentiment before listing.

Quick Comparison Table

Category	Investment Limit	IPO Quota	Allotment Type	Lock-in
RII	Up to ₹2 lakh	35%	Lottery	No
NII (HNI)	Above ₹2 lakh	15%	Proportionate	No
QIB	No limit	50%	Proportionate	No
Anchor Investor	Large institutional	From QIB quota	Pre-allotted	30–90 days

How IPO Allotment Differs by Category

RII Allotment

• If oversubscribed, each investor usually gets one lot through lottery.
• More applications = not always higher chances.

NII Allotment

• Proportionate basis.
• Higher bid amount may increase allocation chances.

QIB Allotment

• Proportionate.
• Large ticket sizes.

Anchor Allocation

• Done before IPO opens.
• Influences subscription momentum.

Advantages & Risks of Each Category

RII – Strengths

• Lower capital requirement
• Dedicated 35% quota
• Lower risk exposure

RII – Risks

• Low allotment chances in oversubscribed IPOs
• Limited allocation (usually 1 lot)

NII – Strengths

• Higher allocation potential
• No upper investment cap

NII – Risks

• Large capital at risk
• Funding cost if using IPO financing
• Allotment not guaranteed

QIB – Strengths

• Research-driven decisions
• Large allocation access

QIB – Risks

• Market exposure risk
• Large capital concentration

Anchor Investor – Strengths

• Early access
• Can influence market perception

Anchor Investor – Risks

• Lock-in restrictions
• Exposure to listing volatility

 

Final Thoughts :-

If you’re applying for an IPO, knowing your investor category is crucial.

• Small investors usually apply under RII.
• High net-worth individuals apply under NII/HNI.
• Institutions fall under QIB.
• Large institutions investing before IPO opening are Anchor Investors.

FAQs

1. Can a retail investor apply in NII category?

Yes, but only if the application amount exceeds ₹2 lakh.

2. Which category has the highest IPO quota?

QIB category with 50% allocation.

3. Does applying for more lots increase chances in RII?

No. Retail allotment is usually lottery-based.

4. Are anchor investors allowed to sell immediately after listing?

No. They have mandatory lock-in periods.

5. Is NII better than RII?

It depends on capital availability and risk appetite.