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Key Highlights
- The HNI category in IPOs is for investors applying with over ₹2 lakh, and it gets 15% of the total IPO allocation.
- HNI applicants cannot choose the cut-off price option and must bid at a fixed price.
- Applying for IPOs in the HNI category can be done online through net banking or a broker.
- Many brokers offer online platforms for resident and NRI HNI investors to conveniently apply for IPOs.
Investing in IPOs (Initial Public Offerings) is an exciting opportunity many investors look forward to. While retail individual investors (RIIs) get the most attention, the HNI or High Net-worth Individual category is important for those looking to invest higher amounts.HNI in IPO applications have some unique aspects compared to applying as an RII. Let's understand how to apply for an IPO in the HNI category and maximise their chances of allotment.
Who is an HNI?
High Net Worth individuals represent the affluent individuals of society. Individuals are categorised as HNIs if they have net investable assets of more than ₹5 crores.
Eligibility Criteria for HNI Investors
To be eligible to apply in the HNI in the IPO category, you must bid for a minimum of ₹2 lakh. There is no upper limit on the investment amount for HNIs.However, the allocation process is a bit different:
- HNI applicants cannot choose the cut-off price option. They must bid at a fixed price.
- If the HNI portion is oversubscribed, investors will get shares on a proportionate basis, not the full quantity they applied for.
- Until the shares are allotted, the total bid amount is blocked in the applicant's bank account.
Note : There is no official "HNI status" needed to apply under this category. Any investor applying with over ₹2 lakh in an IPO is automatically considered an HNI applicant.
How to Apply for IPO in HNI Category?
Now, let's find out how to apply for an IPO as an HNI online. There are mainly two ways: Using Net Banking
- Step 1 : Log in to your net banking portal.
- Step 2 : Go to the IPO/e-IPO section.
- Step 3 : Select the IPO and choose the HNI category.
- Step 4 : Enter the bid details (number of lots and price).
- Step 5 : Approve the blocked amount.
Through a Broker
- Step 1 : Log in to your account with the broker.
- Step 2 : Go to the IPO section and select the HNI category.
- Step 3 : Enter the bid details.
- Step 4 : Approve the mandate request on your UPI app.
Tips for HNI Applicants
Here are some things to keep in mind when applying for HNI in IPO:
- Bid at a reasonable price and don't go overboard just to increase allotment chances. HNIs often end up with overpriced shares if the listing is below expectations.
- Check the IPO prospectus and financial details carefully . Don't just follow the hype around an IPO.
- Have sufficient funds in your account for the full bid amount to be blocked.
- Track the IPO subscription numbers , especially on the last day, to get an idea of the demand.
Investor Profiles
IPOs have different investor profiles. Besides HNIs, there are two more investor profiles that are as follows -
RII (Retail Individual Investors)
Non-Resident Indians (NRIs), individual investors who are resident Indians, or Hindu Undivided Families (HUFs), who block up to ₹2 lakh of an IPO are categorised under this head. Companies usually reserve 35% of the IPO shares for these investors.
QIBs (Qualified Institutional Buyers)
Public financial institutions, Foreign Portfolio Investors (FPIs), and mutual funds belong to this category. These institutions should be registered with the Securities and Exchange Board of India (SEBI) to participate in IPOs. Companies reserve 50% of their stock for these types of investors.
The Relevance of HNI Category in IPO
The HNI category provides an opportunity for investors to apply for a larger IPO allocation. However, with the higher investment amount comes higher risk as well. As an HNI applicant, you must make sure to assess the IPO objectively, plan your bid strategically, and stay within your risk appetite.By understanding the intricacies of how to apply for an IPO in the HNI category, you can navigate your way to a successful bid. Whether you apply online through net banking or with a broker pay attention to the cut-off timings and mandate approval to ensure a smooth process. Also Read: The ABC of IPOs in India: A Beginner's Guide
FAQS - FREQUENTLY ASKED QUESTIONS
What is the minimum amount to apply in the HNI category?
The minimum bid amount for HNI applicants is ₹2 lakh.
Is there any maximum limit for HNI application?
No, there is no upper cap on the amount you can apply for as an HNI in an IPO.
Can HNI applicants choose the cut-off price option?
No, HNI applicants have to bid at a fixed price and cannot opt for the cut-off price.
How many days does it take for shares to be allotted to HNI applicants?
Shares are usually credited to Demat accounts within 6 working days from the IPO closing date.
What happens if the HNI portion is oversubscribed?
In case of oversubscription, HNI applicants are allotted shares on a proportionate basis.
Can NRIs apply in the HNI category?
Yes, NRIs can apply as HNIs if their application amount is more than ₹2 lakh.’
Is the full bid amount blocked for HNI applications?
Yes, the entire bid amount is blocked in your bank account until the shares are allotted.
How can I increase my chances of allotment as an HNI applicant?
Yes, the entire bid amount is blocked in your bank account until the shares are allotted.
Can I apply as an HNI if I have already applied in the retail category?
No, you cannot submit applications in both retail and HNI categories for the same IPO.
Where can I check the subscription status for the HNI portion?
You can check the IPO subscription status on the BSE/NSE websites or your broker's portal.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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