A Non-Institutional Investor (NII) in an A company's first offer of its shares to the public, after which the shares are listed on a stock exchange and can be bought or sold by any investor. Read the full meaning of IPO is any applicant who is neither a Qualified Institutional Buyer (QIB) nor a retail individual investor, which in practice means anyone bidding for shares worth more than Rs 2 lakh in a book built issue.
Anyone asking what is NII in IPO applications will find that the label depends on the bid amount. Individuals, Hindu undivided families (HUFs), companies and trusts can all qualify, and none of them needs registration with SEBI is the statutory regulator of India's securities market, with the legal duty to protect investors and to promote and regulate that market. Read the full meaning of SEBI, unlike a QIB.
Same family or company can be a retail applicant in one IPO and fall in this group in another, depending on the amount bid.
Quota, split and bidding rules
In a book built mainboard IPO, at least 15% is reserved for this category, with at least 35% for retail and up to 50% for QIBs.
Small NII (sNII) covers bids up to Rs 10 lakh and gets one third of it, about 5% of the issue, while big NII (bNII) covers larger bids and gets two thirds, about 10%. A 2022 SEBI amendment created this split, so very large bids do not crowd out smaller ones.
A Rs 5 lakh bid falls in sNII and a Rs 15 lakh bid falls in bNII.
Bids cannot be made at the cut off price, and 100% of the bid amount must be blocked through Applications Supported by Blocked Amount (ASBA).
Why the split and the label matter
The two sub categories can see very different demand, so the subscription figure for the whole NII category does not show the detail. In the Reliance Jio IPO, for example, the bNII and sNII portions recorded different subscription levels when measured by amount and when measured by the number of applications.
In general, the bNII figure comes from fewer and larger bids, while the sNII figure comes from many more applicants.
NII is also different from the other two categories. A QIB is a registered institution, and retail is the category for individuals bidding smaller amounts. In SME IPOs, NII means a minimum of 3 lots, so same word uses a different yardstick.