TaxTMI 
TaxTMI 
TaxTMI 
Introduction
Qualified Institutional Buyer (‘QIB’ for short) is not an intermediary and therefore not required to register with SEBI. The QIBs play a vital role in the Initial Public Offer. QIBs are having the financial expertise and resources to invest in capital markets. They play a crucial role in capital markets by providing liquidity, adding credibility to issuances like IPOs, and driving economic development through their large-scale investments. Their financial assets shall generally exceed Rs100 crores. The QIBs possess expertise and substantial resources needed to participate in large scale security offerings, granting them access to opportunities that are not available to small investors.
Definition
The expression ‘Qualified Institutional Buyer’ is defined under Regulation 2(1)(ss) of Securities Board of India (Issue of Capital and Disclosure Requirement) Regulations, 2018 as-
- a mutual fund, venture capital fund, alternative investment fund and foreign venture capital investor registered with the Board;
- a foreign portfolio investor other than individuals, corporate bodies and family offices;
- a public financial institution;
- a scheduled commercial bank;
- a multilateral and bilateral development financial institution;
- a state industrial development corporation;
- an insurance company registered with the Insurance Regulatory and Development Authority of India;
- a provident fund with minimum corpus of Rs.25 crores;
- a pension fund with minimum corpus of Rs.25 crores registered with the Pension Fund Regulatory and Development Authority established under sub-section (1) of section 3 of the Pension Fund Regulatory and Development Authority Act, 2013;
- National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated 23.11.2005 of the Government of India published in the Gazette of India;
- insurance funds set up and managed by army, navy or air force of the Union of India; and
- insurance funds set up and managed by the Department of Posts, India;
- systemically important non-banking financial companies;
- accredited investors as defined in clause (ab) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, for the limited purpose of their investment in Angel Funds registered with the Board, under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012.
Role of QIBs
The regulatory framework assumes QIBs have the capability to conduct due diligence and manage risks independently, allowing them to operate with fewer restrictions than individual investors.Their substantial financial resources help to create liquidity by engaging in large-scale trading and investment activities. Their participation in a company's initial public offering (IPO) or other issuances acts as a signal of quality, building confidence among other investors. QIBs are vital for companies seeking to raise large amounts of capital for expansion through methods like a Qualified Institutional Placement. Their informed decision-making contributes to efficient price discovery and a more robust capital market.
Advantages
QIBs often face less regulatory scrutiny compared to individual investors, allowing for more direct and faster transactions. They can participate in offerings before the general public, often with a reserved portion of the issue. hey are not required to file the same level of disclosures for each investment as retail investors, as their expertise is presumed.
Disadvantages
The QIBs enable institutional buyers to acquire substantial stakes in companies, potentially diluting the interests of the existing shareholders and reducing their rights. Sometimes they will lead to a shift in the balance of power within the company, affecting the rights of the smaller stakeholders.
Category of QIBs
There must be at least 2 QIBs for aggregate size is up to Rs.250 crore. If the issue exceeds Rs.250 crores, there must be 5 QIBs are to be allotted in the issue. QIBs can subscribe 50% of the public officer of an IPO issue with 60% of the QIB segment designated for anchor investors. A single QIB cannot be allotted more than 50% of the issue.
Functions of a QIB
The first step is for the institution to register with SEBI and meet the criteria for being a QIB, such as being a mutual fund, public financial institution, or foreign portfolio investor. A QIB needs a trading account with a registered stockbroker. Then it shall access the broker's or bank's online portal or trading platform. The QIB shall choose the specific IPO from the list and enter the bid price and quantity. The QIBs cannot bid at the cut-off price. The QIB shall submit the application through the platform. This may involve using a UPI ID or a specific payment method accepted for institutional investors. QIB shall approve the mandate to block the necessary funds for the application before the deadline. A QIB cannot withdraw their bid after the IPO closes, so they must wait for the allotment to be finalized.
Interaction with QIBs
Regulation 59D of SEBI (Issue of Capital and Disclosure Requirement) Regulations, 2018 provides that notwithstanding anything to the contrary contained in the provisions of Chapter IIA, an issuer may interact with the qualified institutional buyers for limited marketing of the intended issue from the time of pre-filing the draft offer document till the Board issues any observations on such pre-filed draft offer document. The interaction shall be restricted to the information contained in the pre-filed draft offer document. In case the issuer interacts with the qualified institutional buyers, the issuer and lead manager(s) shall prepare a list of the qualified institutional buyers who have participated in such interaction(s). The issuer and the lead manager(s) shall submit to the Board confirmation of closure of interaction(s) with the qualified institutional buyers.
Statistics
As of September 30, 2025, QIBs publicly hold stocks worth over Rs 13,947.2 Cr across 17 companies, according to Trendlyne.com. Companies often reserve a large share of their Initial Public Offerings (IPOs) for QIBs, ranging from 65% to 90%.
No. of issues and amount raised
Amount Raised No. of issues
2020 – 54275 cr 13
2021 – 19876 cr 17
2022 – 3615 cr. 7
2023 – 19342 cr. 20
2024 – 64570 cr. 50
2025 – 50106 cr. 25
Top 5 QIPs of Apr – Sep 2025
SBI – 25000 cr. 16.07.2025
Bicon – 4500 cr. 16.06.25
CG Power and Industrial Solutions – 3000 cr. - 30.06.2025
IREDA – 2006 cr – 05.06.2025
Capri Global Capital – 2000 cr. – 09.06.2025
Source: SEBI Prime data.
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