07-11-2012, 06:02 PM
Qualified Institutional Buyer - QIB
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Primarily referring to institutions that manage at least $100 million in securities including banks, savings and loans institutions, insurance companies, investment companies, employee benefit plans, or an entity owned entirely by qualified investors. Also included are registered broker-dealers owning and investing, on a discretionary basis, $10 million in securities of non-affiliates.
Investopedia explains 'Qualified Institutional Buyer - QIB'
QIBs are eligible to participate in the Rule 144A market.
A qualified institutional buyer (QIB or QUIB) is a company that manages at least $100 million of securities on a discretionary basis or is a registered broker-dealer investing at least $10 million in non-affiliate securities.
How It Works/Example:
A QIB can be an insurance company, a bank, a 401(k) plan, an employee benefit plan, a trust fund, abusiness development company (BDC), a charity, or even an entity owned by qualified investors. QIBs are regarded as highly sophisticated entities that do not need as much protection as less sophisticated investors or entities.
Why It Matters:
QIBs are allowed to buy private placements under SEC( securities exchange commission) Rule 144A. These offerings are generally not registered with the SEC, and therefore they are only available to those whom the courts have found able to "fend for themselves." Foreign issuers can also make limited offerings to American QIBs, as legally permissible.