By ipomarket.in Editorial Team · Last reviewed: 2026-10-28
Disclaimer: This article is for informational purposes only and does not constitute investment advice. IPO investments are subject to market risks. Please read the offer document carefully and consult a SEBI-registered investment advisor before investing.
If you follow IPO news in India, five abbreviations show up again and again: QIB, HNI, GMP, OFS and anchor investors. They are not interchangeable. Some describe who is buying, one describes an unregulated price signal, and another describes a completely different way of selling shares. Mixing them up leads to poor decisions. This explainer breaks down each term using SEBI's definitions and the rules that govern them.
QIB: Qualified Institutional Buyers
A Qualified Institutional Buyer is a large institutional investor that SEBI formally recognises as having the financial expertise and capital depth to participate in capital markets without the level of regulatory protection extended to retail investors. In short, the regulator treats these entities as sophisticated players who can look after themselves.
SEBI's definition of QIBs covers mutual funds, foreign portfolio investors (FPIs), insurance companies, scheduled commercial banks, SEBI-registered venture capital funds, state industrial development corporations, and provident funds with a corpus above Rs 25 crore. These are institutions with research teams and large balance sheets, not individual investors.
QIBs matter to retail investors for one practical reason: the QIB subscription figure is widely read as a signal of institutional conviction. When you see a company's subscription split across categories, the QIB line tells you how heavily professional money committed. For how these categories are tracked during the bidding window, see our guide on IPO subscription status explained.
How the offer is split: QIB, HNI and retail
In a standard book-built mainboard IPO under SEBI guidelines, the net offer is divided across three broad buckets. QIBs receive up to 50% of the net offer, at least 15% is reserved for NIIs/HNIs, and at least 35% is set aside for retail investors.
This split is why retail and HNI portions can be over-subscribed many times over while the QIB portion behaves differently. Each bucket competes only within its own reservation. Understanding which category you fall into directly affects your allotment odds, explained further in our breakdown of IPO investor categories: QIB, NII and retail.
HNI: High Net-worth Individuals
HNI (High Net-worth Individual) investors apply for IPO shares worth more than ₹2 lakh. Unlike retail investors, who can bid at the cut-off price, HNIs must specify a bid price and cannot use the cut-off option. This is the ₹2 lakh line that separates the retail category from the non-institutional category.
HNIs bid from the same at-least-15% NII/HNI reservation mentioned above. Because this category often sees heavy leveraged bidding in popular issues, allotment here works on a different basis from the retail lottery system.
Anchor investors: the day-before allocation
Anchor investors are QIBs that get first priority in allocation. They are allotted shares one day before the IPO opens to the public. An anchor book is essentially a group of large institutions that commit early, which can lend credibility to an issue ahead of the public window.
Because anchors are a subset of QIBs, their participation does not create a separate retail-facing category. What it does is set an early tone. A strong anchor list is often read as a confidence signal, though it is not a promise of listing performance. Anchor allotments also carry lock-in conditions, covered in our note on IPO lock-in periods for promoters and anchor investors.
GMP: Grey Market Premium
Grey Market Premium (GMP) is calculated as the difference between the grey market trading price and the IPO issue price. The grey market itself is an unregulated, informal market where investors trade IPO shares and applications before official listing on the NSE or BSE.
Two cautions are essential here. First, GMP changes daily based on IPO demand, market sentiment and subscription levels, and there is no set method or formula prescribed by any regulator for calculating it. The number you see quoted is an informal consensus, not an official figure. Second, a high GMP often indicates that an IPO's share price may open at a premium during its listing on the NSE or BSE, according to market trackers, but GMP is not a guarantee of post-listing performance.
Treat GMP as sentiment data, not a forecast. For a fuller treatment, read what is IPO GMP and how does it work.
OFS: Offer for Sale
OFS (Offer for Sale) is a mechanism SEBI introduced in 2012 that allows existing promoters and large shareholders of a listed company to sell their shares to the public through the stock exchange platform. The key distinction from an IPO is where the money goes. In an OFS, existing shareholders sell shares and receive the proceeds. In a fresh IPO issue, the company creates new shares and receives the proceeds itself.
That difference matters. When a company raises fresh capital, the money can fund expansion or reduce debt. In an OFS, no new money reaches the company; it is a route for existing holders to exit or trim stakes.
An OFS also works differently mechanically. Unlike IPOs and other offerings, an OFS is available for only one trading day. It is also restricted to larger companies: OFS is available only for companies with a market capitalisation of ₹10 billion or more, and SEBI limits this route to the roughly 200 companies listed on the Indian stock exchanges that meet the criteria.
Putting the terms together
These five terms answer different questions. QIB and HNI tell you who is buying and under which reservation. Anchor investors tell you which institutions committed early. GMP is an unofficial sentiment reading from an unregulated market. OFS tells you whether the money from a sale reaches the company or its existing shareholders. Keeping them separate is the first step to reading IPO coverage critically rather than reacting to headlines.
FAQ
What is the difference between a QIB and an HNI?
A QIB is an institutional investor such as a mutual fund, FPI, insurance company or bank that SEBI recognises as sophisticated. An HNI is an individual who applies for IPO shares worth more than ₹2 lakh and must bid at a specified price rather than the cut-off price.
How much of an IPO is reserved for retail investors?
In a standard book-built mainboard IPO, at least 35% of the net offer is reserved for retail investors, up to 50% goes to QIBs, and at least 15% is for NIIs/HNIs.
Is GMP an official figure?
No. Grey Market Premium is the difference between the grey market trading price and the issue price, traded in an unregulated informal market. There is no regulator-prescribed formula for it, and it is not a guarantee of listing performance.
How is an OFS different from an IPO?
In an OFS, existing shareholders sell their shares and keep the proceeds. In a fresh IPO issue, the company creates new shares and receives the money. An OFS is also open for only one trading day and is restricted to companies with a market capitalisation of ₹10 billion or more.
Who are anchor investors?
Anchor investors are QIBs that receive first priority in allocation and are allotted shares one day before the IPO opens to the public.
Last reviewed: 2026-10-28 by the ipomarket.in Editorial Team.