Here are the different types of investors present in capital markets!

Capital markets are an integral part of the financial system that facilitates an efficient transfer of funds from lenders to borrowers. These markets include various intermediaries and participants. One of these participants comprises the investors. Let’s have a look at the different categories of investors present in the capital markets. 

A) Qualified institutional buyers (QIB)-  

This category comprises sophisticated buyers, who have the right financial background and good knowledge about investments. Therefore, they require less regulatory protection as compared to retail investors. QIBs include foreign portfolio investors (FPIs), and institutions such as mutual funds, pension funds, insurance funds, banks, etc. Capital raised by selling the shares to QIB is known as qualified institutional placement (QIP). This method of raising funds is easier as it is less time-consuming and involves less paperwork. 

B) High net worth individuals (HNI)- 

These are non-institutional buyers comprising wealthy individuals with a specified range of investable capital. This category can be further classified into: 

1) HNI- individuals with more than Rs 2 crore of investable capital.  

2) Emerging HNI- individuals with an investable surplus between Rs 25 lakh to Rs 2 crore.  

3) Ultra HNI- Individuals who have assets worth Rs 200 crore and above. 

C) Retail investors- 

Retail investors are individual investors who buy & sell securities on a smaller scale as compared to qualified institutional buyers and high-net-worth individuals. They trade securities on their own behalf as against qualified institutional buyers who manage investors' money parked with them. Retail investors often do not possess the skills and knowledge that qualified institutional buyers possess. They face a higher risk of losing their capital and hence, require more regulatory protection.