An IPO is the short form of Initial Public Offering. An Initial Public Offering is an allotment of shares offered by a private company, for the first time, to the public at large. When a company starts its operations, shares of the company may be owned by specific individuals such as owners, angel investors and others. When a company wishes to grow itself, or expand, it has to raise capital. Hence, it offers an IPO of its shares to the public, and then gets listed on the stock exchange. A range of investors subscribe to IPOs, and NII meaning in an IPO, is essential if you are planning to invest.
Before you find out what the NII meaning in an IPO is, you should have a basic idea of how an IPO works. If you have had any experience in the share markets and have had to open a demat account to invest, you may already have some clue about an IPO. When a private company offers up an IPO for subscription to the general public, investors from the public can choose to be allotted shares of the company. Individual as well as institutional investors can select the number of shares they would like to buy, but it is up to the company to finally allot a specific amount.
Are you interested in subscribing to any upcoming IPO? Then you may want to learn about who an NII is. “NII” stands for “Non-institutional investor” or “Non-institutional bidder”. In simple terms, when any individual subscribes to an IPO for an allotment of shares in a company, they are essentially bidding for those shares, as it is up to the company to allot them. Hence, investors who are individuals who bid for shares worth over Rs. 2 Lakhs in any IPO are called NII or non-institutional bidders/investors.
What is an NII in an IPO? You may call an NII a “who” or a “what,” as NII represents a number of categories. The following can be classified as an NII:
An NII in an IPO is a non-institutional bidder with the following aspects:
In both the sub-categories above, in case an IPO does not witness over-subscription, all the shares in any respective category are offered as the full allotment in that particular sub-category.
If you wish to open a demat account today and trade in the stock market, as you must have heard, it is a lucrative way to invest, an upcoming IPO also balances your financial portfolio. In case you have researched upcoming IPOs in 2023, you have probably come across small startups attempting to be listed. These may be on a promising growth path. There is nothing better in the world of investment than seeing a company grow from the ground up, and as an NII, you can do this only if you invest. Therefore, IPOs have historically proved as promising avenues for investment, and the idea is to get your allotted shares and hold them for the long term.
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