QIB in IPO: Unlocking the Power of QIBs for Smart Investing

Role of QIB in IPO success and how you can gain out of their experience.

Have you ever thought, about how the investment in IPO works and who those entities subscribe to a massive chunk of shares during the Initial Public Offerings (IPO) process? They are called Qualified Institutional Buyers (QIBs). While is it important to understand the role of QIB, it is again interesting to know how their investment can help you to gain from the stock after the IPO is listed.

What is QIB in IPO

QIB full form

QIB full form is Qualified Institutional Buyer. These are institutional investors who are sophisticated enough to participate in various securities offerings, including IPOs. QIBs include mutual funds, pension funds, insurance companies, and other financial institutions with substantial assets under management.

These financial institutions have enough muscle to do a complete analysis of the companies going for IPO.

QIB’s investment in the company

QIBs have the strength to analyze the company and invest in the company’s IPO if it is good to invest for the long term. They collect enough information about the company before investing in the IPO. These QIBs speak with these companies about their long-term plans, analyze their financials, etc. to understand the company before investing in the IPO.

Retail investors like you and me cannot do an in-depth analysis to understand the company before investing. It is clear that if QIB invests in an IPO, the company is better for investing by retail investors like you and me. while QIBs get a big pie of the IPO, retail investors can invest only in a small pie of the IPO. Hence, it is important to understand how these QIBs can influence the price of IPO and market sentiment.

Understanding QIB’s behavior can work in your favor. Read QIB’s behavior to take advantage of their analysis.

QIB in IPO

The involvement of QIBs in IPOs is an important step for both companies going public and individual retail investors. They invest a significant amount of money in the company during the IPO process. Hence, they do proper due diligence about the company and keep an eye on the performance of the company over a long period. This set the trend for the stock and its future performance post-listing.

QIBs are typically large financial institutions with a track record of managing substantial assets. By being “qualified,” these institutions gain access to certain investment opportunities that may not be available to the retail investor.

QIB’s investment in the company influences stock prices, market sentiment, and the success of IPOs. Individual investors often look to the moves of QIBs as a signal of confidence in a particular company.

How retail investors will benefit from QIB in IPO

While QIBs play a pivotal role in shaping market trends, retail investors must leverage this knowledge to make informed decisions. QIB’s investment in the company opens a path for retail investors to understand the company. QIBs have access to in-depth research and expert analysis that most retail investors don’t. If you can track the activity of QIB in IPO, you can get all the valuable insights about the market sentiment in the IPO.

How QIB in IPO influences the Post-listing

It is important to understand when to enter into the stock if you missed the IPO. How can QIB in IPO help you to understand that?

I was looking for company insights to invest in those stocks listed on the exchanges in 2022 or 2023. Apart from other fundamental analyses, one of my criteria was the QIB portion subscription of the IPO during the IPO process. In most cases if the QIB in IPO portion subscribed more than 25% the stock is listed higher with a premium and then slowly the stock price falls after 2 to 3 weeks of listing. That is the right time to think of investing in those companies if the fundamentals of the company are strong. Higher QIB subscription also signals the strong fundamentals of the company.

However, it is also important to note the broad market sentiment before investing in the stock market. It is also noted that a few cases have different outlooks. For example, Harsha Engineering IPO was subscribed 113 times by QIBs in September 2022 and the stock listed at premium and listing close was over 47% from the issue price. However, the current price of the stock is just above 19% of the issue price. Hence, it is also important to understand when to enter into a stock.

I have analyzed IPO Watch 2023 to understand the role of QIBs in IPO listing. QIB portion has filled above 25 times, those IPOs performed very well. IREDA IPO is the best performer in IPO India 2023 and beyond with 243% as of December 2023. While I looked at the data carefully, the QIB portion of the IREDA IPO was subscribed while the retailed portion was subscribed only 3.3 times, and the HNI portion 6 times.

The QIB portion of Tata Tech IPO was subscribed 87 times while SBFC finance subscribed 76 times. Hence it is important to observe the QIB portion subscription status after the IPO closed. It is important to note that when QIB (Qualified Institutional Buyers) buy overwhelmingly, the fundamentals of the company are strong. If you are interested in the company, you just need to focus on the technical side to decide about the entry point and exit point.

Looking for recently listed IPOs after 4 – 8 weeks to further analyze to invest. Get the complete IPO historical performance in Moneycontrol that will help you to check the performance of the stock in comparison to the QIB portion subscription.

Final word on QIB in IPO

While QIBs can be valuable investment guides, blindly following their every move is never a good idea. Learning and following QIB in IPO investment is a smart move to understand the market sentiment about the IPO. As a retail investor keep an eye on the moves of Qualified Institutional Buyers (QIBs) to unlock your investment success.

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We endeavor to help you to understand different aspects of a company before you invest in the company’s IPO. Learn all company insights for investment in new companies in the Indian share market 2023. To know more information about company insights for investment, business overview of companies for investment, here are some suggested readings on company insights for investment –10 Best IPOs in 2022, Tata Motors Stock Price, Tesla Stock Price Prediction 2025, Highest Dividend paying stocks, 5 best upcoming IPOs in India, Tata Technologies IPO Review, IPO Watch 2024, IPOs in 2023.