Spillover (IPO Categories)

The three buckets

Every Indian IPO divides its shares into three investor categories, with SEBI-prescribed proportions for a typical book-built issue: Qualified Institutional Buyers (QIBs) get up to 50%, Retail Individual Investors get not less than 35%, and Non-Institutional Investors (NIIs / HNIs) get not less than 15%.

But demand never arrives neatly in those proportions. Retail might be flooded with applications while NII falls short, or vice versa. Spillover is the mechanism that handles this mismatch — moving the leftover shares from an under-subscribed bucket to one that is over-subscribed.

How the reallocation actually flows

The rules are specific and worth knowing. If the retail or NII category is under-subscribed, the unsold shares can spill over to other categories that have excess demand. This is done in consultation with the lead manager, registrar, the stock exchange and the issuer — not arbitrarily.

The crucial asymmetry: QIB under-subscription cannot be filled by spillover from retail or NII. Worse, in a normal book-built IPO, if QIBs don't take up their minimum, the whole issue can fail — which is precisely why a strong QIB book is treated as a quality signal. Within the NII bucket itself, there's a further split: one-third reserved for the ₹2–10 lakh applicants and two-thirds for those applying above ₹10 lakh.

Why it matters to you

Spillover is one reason allotment outcomes can surprise applicants. If a category you didn't apply in was weak, *your* category's effective availability — and your odds of allotment — can shift.

My view: don't try to game spillover; it's not predictable enough to build a strategy around. But do read it as information. An IPO where the QIB portion is heavily subscribed while retail lags is a healthier signal than the reverse, because institutions do the deepest due diligence. Spillover mechanics also quietly explain why some over-hyped retail IPOs still allot reasonably — and why a weak institutional book is a warning you should heed before you bid. Treat the subscription pattern across the three buckets as a free verdict from the market's most informed players.