In an IPO, QIB stands for Qualified Institutional Buyer, which is a category of investors that are generally perceived to possess expertise and the financial muscle to evaluate and invest in securities. QIBs are institutional investors that own or manage on a discretionary basis at least $100 million worth of securities. The Securities and Exchange Board of India (SEBI) has laid out detailed rules and regulations that specify who can be categorized as a QIB. According to the Disclosure and Investor Protection Guidelines issued by the SEBI, the following entities are usually eligible to be classified as a Qualified Institutional Buyer as long as they satisfy the minimum net worth, minimum investment size, and track record of investment conditions:
- Scheduled Commercial Banks
- Mutual Funds
- Foreign Portfolio Investors
- Alternative Investment Funds
- Insurance Companies
- Pension Funds
- National Investment and Infrastructure Fund
- Sovereign Wealth Funds
- International or Multilateral Organizations or Agencies
- Indian Provident Funds
- Indian Financial Institutions
- Indian Asset Management Companies
QIBs can easily take on the risk involved with investing in IPOs due to their seemingly strong financial position.
