SME IPO Investors

After BSE and NSE’s new norms, SME IPO can have these categories of investors:

Investor Categories in SME IPOs

1. Individual Investors

As per new norms, the retail individual category has been replaced by individual investor, who apply for minimum 2 lots requiring a minimum investment amount of Rs 2 lakh or above.

It means that under the new norms effective from July 1, 2025, retail participation in SME IPOs requires minimum bidding of above Rs 2 lakh.

2. Non-Institutional Investor (NII)/High Net Worth Individuals (HNI)

Investors who bid for more than two lots (minimum 3 lots) in SME IPO fall under Non-Institutional investors (NIIs) category.

This category is further sub-divided into two – Small NII and Big NII, described below:

• Small NII: Investors who bid for upto Rs 10 lakh are considered as small NII/HNI.
• Big NII: Investors whose bidding value exceeds Rs 10 lakh are called Big HNIs.
• Allocation methodology: In NII category, allotment of shares to HNI investors will be done by draw of lots, similar to mainboard IPOs.

3. Qualified Institutional Investors (QIIs)/Qualified Institutional Bidders (QIBs)

QIB stands for a qualified institutional buyer. These are SEBI-registered financial institutions like Mutual funds, Commercial banks, Public financial institutions and foreign portfolio investors.

4. Anchor Investors

Anchor investors are large institutional investors—like mutual funds, insurance funds, pension funds, etc. - who subscribe the IPO one day before the issue opening date.

In SME IPOs, anchors usually invest a minimum of ₹1 crore.

5. Employees, Shareholders, or Poliycholders (Rare case)

Investors falling under the employee, shareholder, and policyholder categories must apply for a minimum of 2 lots, with minimum application size of above Rs 2 lakh.

Note: In SME IPO, Bidding at the cut-off price is not allowed for any category of investors. Also, also they cannot modify or cancel their bidding once placed.