Answer
Companies divide their public shares into specific portions for different buyer groups. These groups include Retail Individual Investors, Qualified Institutional Buyers, and Non-Institutional Investors. The allocation rules depend directly on the chosen style of the public issue.
Book Building Issue via Profit Route
- Retail Category: Gets a minimum of 35% of the total issue size.
- Non-Institutional Category: Receives at least 15% of the total portion. Inside this group, big non-institutional buyers get 10% and small non-institutional buyers get 5%.
- Qualified Institutional Buyers: Get a maximum cap of 50% of the shares.
Book Building Issue via QIB Route
- Qualified Institutional Buyers: Receive a minimum of 75% of the total issue size.
- Non-Institutional Category: Gets a maximum limit of 15% of the portion.
- Retail Category: Gets a maximum limit of 10% of the shares.
Fixed Price Public Issue
- Retail Category: Gets a minimum of 50% of the entire offer size.
- Other Buyers: The remaining shares go to corporations, separate individuals, big institutional buyers, and non-institutional investors.