institutional investor

Organization that invests large sums in the financial market, in both gilts and equities. Institutional investors, such as pension funds, trade unions, and insurance companies, usually have in-house investment departments employing fund managers and analysts to manage their investments.

Because institutional investors invest such large sums in the markets, they have considerable power to influence corporate policy. This power is often exercised during takeover bids and to express dissatisfaction at the performance of directors. Initial public offerings, rights issues, and other share placings are often offered to institutional markets on preferential terms before they are offered to the public.