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A Qualified Institutional Buyer(QIB), applying in an IPO under the Anchor Investor Portion and who has Bid for an amount of atleast ₹10 Crore.
A Bid-lot is the pre-determined number of shares which have to be applied for by an investor. It is different for each issue. There is a minimum lot size which is pre-decided by the company and mentioned in the application form. Example: Minimum bid lot in IPO of XYZ co. - 10 Bid-lot Multiples of 10 Price Band - 100-120. It means that a retail investor cannot apply for less than 10 shares in that particular issue. The application for more than 10 shares has to be in multiples of 10 like 20, 30, 40, etc.
IPO Cut-off price is used in a book build issue. The issuing company must specify the price band or a floor price in the offer document. The actual price of the issue is discovered on the basis of demand for the issue. The actual price must be within the price band or any price above the floor price. This issue price is called Cut off price. Only retail individual investors have an option of applying at this price.
"Offer document" is a document which contains all the relevant information about the company, promoters, project, financial details, objective of raising money, terms of the issue etc. and is used for inviting subscription to the issue being made by the issuer.
The price band is a band of price within which investors can bid. The spread between the floor and the cap of the price band shall not be more than 20%. The price band can be revised. If revised, the bidding period shall be extended for a further period of three days, subject to the total bidding period not exceeding thirteen days.
A Red Herring Prospectus (RHP) is a preliminary registration document that is filed with SEBI in the case of book building issue which does not have details of either price or number of shares being offered or the amount of issue. This means that in case price is not disclosed, the number of shares and the upper and lower price bands are disclosed. On the other hand, an issuer can state the issue size and the number of shares are determined later. In the case of book-built issues, it is a process of price discovery as the price cannot be determined until the bidding process is completed. Hence, such details are not shown in the Red Herring prospectus filed with ROC in terms of the provisions of the Companies Act. Only on completion of the bidding process, the details of the final price are included in the offer document. The offer document filed thereafter with ROC is called a prospectus.
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