IPO Quotas and Investor Categories

Jio Platforms offered 27 crore shares in October 2026. Bids were counted at 7 pm on 23 October, the last day, for the 19.75 crore shares left once the anchors' shares were set aside. Bidders had asked for 438.26 crore shares against those 19.75 crore, and 345.75 crore of those bids came from institutions.

Now share those 19.75 crore shares out by demand alone, with no quotas. Retail investors made up about 5% of the bids, so they would have received about 1.04 crore shares. Jio's retail quota was 8.50 crore shares, about 8.2 times as many. That is a what-if, worked out here for the lesson; it is not how the issue ran. It shows what a quota does: it fixes, before bidding, how many shares each kind of buyer can get, so a flood of large orders cannot crowd out small ones.

India's rule, for a company that meets SEBI's profit test: at least 35% of the offer to retail investors, at least 15% to non-institutional investors: show the note on Non-institutional investor (NII), and at most 50% to institutions. Employees and the parent company's shareholders may get their own portions outside it.

Each quota then has its own way of being shared out. Anchors are chosen by the company. Other institutions share in proportion to what they asked. Larger individuals and retail investors, when there are too many applicants, are drawn for a minimum and only then share any leftover in proportion. The rest of this lesson takes each in turn.

Around the world: the United States has no fixed retail quota. Underwriters allot most IPO shares to institutions and wealthy clients, and most individuals buy once trading starts.

An anchor investor is a large institution (a QIB: a mutual fund, insurer, pension fund, bank or foreign portfolio investor) that applies for at least ₹10 crore one working day before the issue opens. Lead managers and anyone linked to the promoter cannot be anchors.

Anchors take up to 60% of the institutions' portion. Of that anchor portion, 40% is kept for domestic mutual funds (33.33%) and for life insurers and pension funds (6.67%). For an allocation above ₹250 crore, an issue needs 5 to 15 anchors for the first ₹250 crore and up to 15 more for every further ₹250 crore, each putting in at least ₹5 crore.

Jio's anchor day was Monday 19 October 2026, because Tuesday was a market holiday. 212 anchors took 72474066 shares at ₹1119, ₹8109.85 crore: show the note on Jio's anchor book, Mon 19 Oct 2026 in all, 59.66% of the institutions' portion. Twenty-five fund houses, through 95 schemes, took about a third of it. The rules would have allowed up to 495 anchors.

Why a day early? The company and its lead managers choose the anchors that day, and the number of shares and the price must be published on the exchanges before the issue opens. Everyone else then bids knowing that large institutions have already committed money at that price.

The price rule: if the final price is higher than the anchor price, anchors pay the difference; if it is lower, they get no refund. Jio's anchors paid ₹1119, the final price too. Anchors can never pay less than other bidders.

The lock-in: show the note on Lock-in: half of an anchor's shares cannot be sold for 30 days from allotment, the other half for 90 days. For Jio, that meant late November 2026 and late January 2027. An unlock allows a sale; it does not mean one.

What an anchor is not: a guarantee. A busy anchor book shows institutional demand at that price, the same kind of signal as a subscription number, and subscription measures demand, not quality.

After the anchors, Jio's institutional book had 49007827 shares. Of these, 5% (2450391 shares) go to mutual funds in proportion to their bids, and the rest to all institutions, mutual funds included, in proportion to theirs.

The book was 70.55 times bid at 7 pm on 23 October. So an institution that bid for 1 crore shares would get about 134752: show the note on What a 1 crore bid gets, 7 pm book: about 1.35 in every 100 it asked for. That is worked out on the 7 pm book, so the final figure may differ slightly. Every institution gets that same fraction, whatever its size.

SEBI's own worked table does the same with ten made-up institutions: each gets about 38 shares for every 498 it asked for.

Institutions and larger bidders cannot withdraw or lower a bid at any stage; retail investors can until the close. The names of institutional bidders are not published.

Why this matters to a small investor: it is why the headline number is mostly the institutions' number. A subscription of 70 times in this portion says nothing about the room that retail investors compete for.

A bid above ₹2 lakh is a non-institutional investor (NII) bid. Since 1 April 2022 the NII quota is split: one third for bids above ₹2 lakh up to ₹10 lakh (often called sNII, small), and two thirds for bids above ₹10 lakh (bNII, big). If one room is not filled, its unused shares go to the other.

In each room, every applicant is due at least the minimum NII application, if shares allow, and the rest in proportion. In a crowded room the minimum goes to applicants chosen by a draw. SEBI's own example: 50000 applicants for a room of 500000 shares with a minimum of 340 shares gives 1471 winners, and 48529 get nothing. The regulation applies the same method to the room above ₹10 lakh.

Jio's first room, ₹2 lakh to ₹10 lakh, held 12148189 shares and was 10.22 times bid: at most 67489 winners, each with 180 shares: show the note on The minimum NII application on Jio. The second room, above ₹10 lakh, held 24296380 shares and was 15.89 times bid: at most 134979 winners, each with 180 shares, not 900.

In Jio's own lots the thresholds read: up to 14 lots (₹187992) is retail; 15 to 74 lots (₹201420 to ₹993672) is the first room; 75 lots (₹1007100) and above is the second.

Non-institutional bids cannot be withdrawn or lowered, and the whole amount stays blocked in your account until allotment.

A retail investor is an individual bidding up to ₹2 lakh, counted at the top of the price band. Only retail may bid at cut-off: show the note on Cut-off, and only retail may revise or withdraw a bid before the close.

Count the seats: the retail shares divided by one lot. Jio's retail portion had 85037327 shares in lots of 12, so at most 7086443 seats.

Regime one, seats to spare. When valid applicants are fewer than the lots available, everyone gets at least one lot and the rest is shared in proportion. Hyundai Motor India's retail portion was bid only 0.50 times in October 2024, so every valid retail bid at the final price could get all its shares. SEBI's first example is the in-between case: retail 4 times bid, 100000 applicants for 175000 lots, so everyone gets a lot plus a proportionate extra.

Regime two, more applicants than seats. SEBI's second example: 200000 applicants for 175000 lots, so 175000 are drawn, at the same rate whatever number of lots each asked for. The IPOs Explained lesson shows a real draw table, Burger King India's 7 in 256.

Why 2.72 times does not settle it. Jio's retail demand was 19263574 lots. If every applicant had asked for 14 lots there would have been only about 1375970 applicants, fewer than the 7086443 seats: no draw. If most asked for 1 lot, there would be many more applicants than seats: a draw. The applicants decide, not the multiple.

An undersubscribed retail portion does not sink an issue: Hyundai was 2.37 times bid overall, and unused retail shares can go to other categories.

An issuer may keep separate portions for its employees and for the shareholders of its listed parent or listed subsidiary. Each is its own competition with its own limit.

Employees: in all at most 5% of post-issue capital; each employee is allotted at most ₹2 lakh, or up to ₹5 lakh only if the portion is not filled. Jio kept 4694835 shares for eligible employees, who could bid up to ₹5 lakh at ₹54 off a share (4.83%); the portion was 2.93 times bid.

The parent's shareholders: shareholders other than promoters, of a listed parent or listed subsidiary, at most 10% of the issue. Jio's parent, Reliance Industries, is listed, and its shareholders had 22341376 shares (8.27%), up to ₹2 lakh each; the portion was 7.60 times bid.

A second application. People in a reserved portion may not also bid in the main offer, except employees and retail individual shareholders: show the note on Retail individual shareholder. Two applications are two separate draws, each with its own block of money.

Discounts are at most 10% below the price others pay, and are stated in rupees. LIC's issue of May 2022, at ₹949 a share, took ₹45 off for retail investors and employees (4.74%) and ₹60 off for policyholders (6.32%).

Unused reserved shares move to other reserved portions first, then to the main offer.

For any portion, three numbers matter: its shares (in the offer document and on the exchange's bid page), its minimum allotment (one lot for retail, the minimum NII application above ₹2 lakh) and the valid applicants (in the basis of allotment: show the note on Basis of allotment, published after the issue closes). Seats are the shares divided by the minimum.

If valid applicants are more than the seats, your chance is seats divided by applicants, and a winner gets the minimum. If they are fewer, everyone gets the minimum and leftovers are shared in proportion. Institutions are the exception: a straight proportion.

Jio, portion by portion: the institutions after anchors, 49007827 shares at 70.55 times, give each institution about 1.35 in 100 of what it asked. The first NII room has 67489 seats of 180 shares and the second 134979 seats of 180 shares. Retail has 7086443 seats of 12 shares. Employees and Reliance shareholders have their own seats and their own draws.

A floor we can prove: Jio drew about 1.39 crore applications across every portion. Even if every one had been a retail application, 7086443 seats would have served at least 51 in every 100. The real retail ratio is in Jio's published basis of allotment.

Say Maya bids one lot (an illustration): ₹13428 blocked from her ₹1 lakh learning budget, as a retail bid at cut-off. If applicants exceed seats, her chance of winning 12 shares is seats divided by applicants; if not, she gets her 12 shares. Bidding 14 lots would block ₹187992 and, in a draw, still win at most 12 shares plus any proportionate leftovers.

The common slip: "2.72 times means about a 1 in 3 chance." It does not. 2.72 counts shares; the chance counts people.

SEBI's profit test asks for three years of operating profit averaging at least ₹15 crore, with a profit in each, plus at least ₹3 crore of net tangible assets and ₹1 crore of net worth in each year. A company that fails it may still list, under a second route known as Regulation 6(2): show the note on Regulation 6(2).

That route changes the split: at least 75% of the offer to institutions, at most 15% to NIIs and at most 10% to retail. If institutions do not take their 75%, all subscription money is refunded, and unused institutional shares cannot pass to anyone else.

Swiggy, November 2024, had a loss in each of the three years before its IPO. Its retail portion of 28974491 shares, in lots of 38, made at most 762486 seats. Jio's retail portion made 7086443, about 9.3 times as many. Swiggy's book showed the rule at work: institutions 6.02 times, larger bidders 0.41, retail 1.14. The institutions carried the issue.

The IPOs Explained lesson shows another 6(2) issue, Burger King India, so this chapter needs no second case.

What it does not mean: that the company is bad, or that a company on the usual route is good. It means less room for retail and more for institutions.

Small and medium enterprise (SME) issues list on separate platforms, such as NSE Emerge, with a post-issue capital of up to ₹25 crore. Since 8 March 2025 such a company also needs an operating profit of at least ₹1 crore in two of its last three years.

The rooms are the same kinds as the main board's: at least 35% to individual investors bidding the minimum, at least 15% to NIIs (one third up to ₹10 lakh, two thirds above), and at most 50% to institutions. The difference is the ticket. An individual's smallest bid is two lots, worth more than ₹2 lakh, so an SME "individual" already bids more than a main-board retail investor may.

Allotment is the same draw for the minimum, then proportion, for individuals and NIIs alike. SEBI moved NIIs to a draw because proportional allotment "tends to encourage over-leveraging".

Fewer people are needed: an SME issue needs at least 200 allottees, against 1000 on the main board. Anchors may come in from ₹2 crore each, the issue is fully underwritten, and a market maker: show the note on Market maker must quote prices for at least three years. On NSE Emerge, the opening price on listing day is capped at 90% above the issue price, and since 4 August 2025 at 20% below it. Sellers may offer at most 20% of an SME issue.

This chapter covers quotas only; the IPOs Explained lesson has the rest of the SME rulebook.

Once a company is listed, shares reach the public through other routes, and each has its own buyers.

A further public offer (FPO) is a listed company selling new shares to the public, with portions like an IPO's. An offer for sale through the exchange is a listed company's owners selling existing shares in a one or two day window on the exchange, with at least 10% of the offer kept for retail investors. A qualified institutions placement (QIP): show the note on Qualified institutions placement (QIP) sells new shares to institutions only; retail investors cannot enter. A rights issue offers new shares to existing holders on a record date. A buyback is the company buying its own shares.

Rights issues and buybacks are explained in the corporate actions lesson; here they are only placed on the map.