QIBs are an investment institution who buy the shares of a company on a large scale. Qualified Institutional Buyers are those Institutional investors who are generally perceived to possess expertise and the financial pro

Note: The SEBI (Disclosure and Investor Protection) Guidelines, 2000, have been repealed and replaced by the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. The advice will be based on the current regulations. As per SEBI (ICDR) Regulations, 2018, in a public issue made through the book-building process, the net offer to the public is allocated as follows: Qualified Institutional Buyers (QIBs): Not less than 50% of the net offer. Non-Institutional Investors (NIIs): Not less than 15% of the net offer. Retail Individual Investors (RIIs): Not less than 35% of the net offer. For the QIB portion, the regulations specify further sub-allocations: Mutual Funds: 5% of the QIB portion shall be available for allocation to mutual funds. Other QIBs (including Mutual Funds): The remaining QIB portion (95%) shall be available for allocation to all QIBs, including mutual funds, on a proportionate basis. Given Data: Total Equity Shares Issued = 200 crores Total Bids from QIBs and Mutual Funds = 260 crores Bids from QIBs (other than MFs) (A1, A2, A3) = 30 + 10 + 90 = 130 crores Bids from Mutual Funds (MF1, MF2, MF3) = 30 + 30 + 70 = 130 crores Advice to the Board of Directors: Assuming the entire 200 crores equity shares are offered to QIBs (which is not explicitly stated but implied by the context of QIB bids), the allocation would be as follows: 1. Allocation to Mutual Funds (5% of QIB Portion): Shares reserved for Mutual Funds = 5% of 200 crores = 10 crores shares Since Mutual Funds have bid for 130 crores shares, they will be allotted 10 crores shares from this reserved portion. 2. Allocation to All QIBs (including Mutual Funds) (Remaining 95% of QIB Portion): Remaining QIB portion = 95% of 200 crores = 190 crores shares Total bids from all QIBs (including MFs) = 260 crores This 190 crores shares will be allotted on a proportionate basis to all QIBs (including Mutual Funds) based on their bids. Proportionate Allotment: Proportionate Allotment Factor = Shares Available / Total Bids = 190 crores / 260 crores ≈ 0.730769 Allotment to QIBs (other than MFs): A1: 30 crores × 0.730769 = 21.92307 crores A2: 10 crores × 0.730769 = 7.30769 crores A3: 90 crores × 0.730769 = 65.76921 crores Total for A1-A3 = 95.00 crores (approx) Allotment to Mutual Funds (from 95% portion): MF1: 30 crores × 0.730769 = 21.92307 crores MF2: 30 crores × 0.730769 = 21.92307 crores MF3: 70 crores × 0.730769 = 51.15383 crores Total for MF1-MF3 = 95.00 crores (approx) Summary of Allotment: Mutual Funds: 10 crores (from 5% reserved) + 95 crores (from 95% proportionate) = 105 crores shares Other QIBs (A1-A3): 95 crores shares Total Allotment = 200 crores shares The Board should ensure that the allotment is done strictly as per these proportionate calculations and within the overall issue size.