Qualified Institutional Buyer (QIB)
An institutional investor with over $100 million in securities, eligible to purchase restricted private placements under SEC Rule 144A.
What is QIB?
A qualified institutional buyer (QIB) is a sophisticated institutional investor that owns and invests on a discretionary basis at least $100 million in securities of issuers not affiliated with the investor. The QIB designation, defined under SEC Rule 144A, allows these institutions to buy and trade restricted securities (privately placed securities that have not been registered with the SEC) among themselves without registration requirements. Eligible entities include insurance companies, investment companies, pension funds, banks with at least $25 million in securities, and registered broker-dealers investing for their own accounts. The Rule 144A market — the secondary market for QIB trading of restricted securities — has grown into a major segment of the US capital markets, enabling corporations to raise large amounts of debt and equity privately from sophisticated institutional buyers with less regulatory burden than a public offering.
Example
When Saudi Aramco wanted to raise $6 billion in US bonds in 2019 without conducting a full public offering registered with the SEC, it issued the bonds under Rule 144A, restricting initial sales to QIBs only. Large institutional investors — insurance companies, pension funds, and asset managers — purchased the bonds in the private placement. After a 6-month holding period, the bonds became eligible for resale more broadly under Rule 144A, creating significant secondary market liquidity without the company ever filing a full S-1 registration statement.
Source: SEC — Rule 144A