Different Types of Investors in the Stock Market: Learn about different types of investors and their behavior in the stock market and mutual funds.
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1. Retail Individual Investor
As per the Securities and Exchange Board of India (Issuance of Capital and Disclosure Requirements) Regulations, 2009, retail individual investor means an investor who applies or bids for specified securities for a value exceeding Rs 2 lakh. This limit of Rs 2 lakh is only for bidding/subscribing to securities in an IPO.
There is no bar on the investor’s existing shareholding. If an issuer makes a public issue through the book-building process, a minimum of 35% of the net offer made to the public must be allocated to retail individual investors. Also, check the Fincare Bank Savings Account.
2. Qualified Institutional Bidder (QIB):
As per the Securities and Exchange Board of India (Capital Issues and Disclosure Requirements) Regulations, 2009, “Qualified Institutional Buyer” means:
- A mutual fund, venture capital fund, and foreign venture capital investor registered with SEBI
- A public financial institution as defined in section 4A of the Companies Act, 1956
- 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.
- A provident fund with a minimum corpus of twenty-five crore rupees
- A pension fund with a minimum corpus of twenty-five crore rupees
- Foreign Institutional Investor registered with SEBI.
- National Investment Fund
- Insurance fund set up and managed by the Army, Navy, or Air Force of the Union of India.
- The insurance fund is set up and managed by the Department of Posts, India.
In the case of IPO book building, QIBs are allotted a minimum of 50% of the total issue.
3. High Net Worth Individuals:
In the context of IPOs, a retail investor who applies for shares worth more than Rs 2 lakh is considered a high-net-worth individual.
4. Non Institutional Investors:
As per the Securities and Exchange Board of India (Capital Issues and Disclosure Requirements) Regulations, 2009, noninstitutional investor means any investor other than a retail individual investor and qualified institutional buyer. In the case of book-building issues in India, they are allotted 15% of the total issue. You may also like Suryoday Bank Savings Account.
5. Anchor Investors:
The concept of anchor investor was introduced by SEBI in 2009. As per the Securities and Exchange Board of India (Capital Issues and Disclosure Requirements) Regulations, 2009, anchor investor means a qualified institutional buyer who applies for shares worth Rs 10 crore or more in a public issue made through the book-building process in accordance with SEBI regulations. Anchor investors are offered shares a day before the IPO opens.
Their role in an IPO is like an anchor who takes a minimum subscription of Rs 10 crore and attracts investors to the public offerings before they hit the market to build confidence in them. In a book-built IPO, up to 30%he total issue sizes can be allotted to anchor investors. The anchor investor can’t sell his shares for at least 30 days after the allotment.
