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How to Apply IPO in HNI Category

3 Mins 08 May 2023 0 COMMENT


When you apply for an IPO as an individual, you have a choice to apply for the IPO under the retail category or under the HNI category. The HNI category is also known as the NII or non-institutional investor (NII) category. How to apply IPO in HNI category or in the NII category is the main question you need to answer. Here we look at in detail at how to apply for IPO under HNI or the high net worth investor category.

The HNI category or the NII category has an allocation of 15% normally in any IPO. You need to be therefore clear on how to apply for IPO in HNI category. To understand how to apply in HNI category, you must first be able to bring in the necessary funds, either as own funds or as borrowed funds. Here is how to apply HNI IPO.

Understanding the HNI Category

In any IPO, there are broadly 3 categories viz. the Retail Category, the HNI / NII category and the qualified institutional buyer (QIB) category. Under the HNI category, you have individuals apply for over Rs 2 lakh of investment amount, corporates, NRIs, HUFs, FPIs, Trusts and corporate bodies, NBFCs and so on. The HNI rules are the same irrespective of whether it is a fresh offer or an offer for sale. Let us first understand what or who exactly is an HNI.

In IPOs, the HNI / NII category enjoys a 15% reservation of IPO shares as per extant SEBI regulations. HNIs typically invest with a minimum capital of Rs200,000 in IPOs. The HNI category is now classified into two further sub categories.

a)  S-HNI category which is the smaller HNIs who invest between Rs2 lakhs and Rs10 lakhs in any IPO. Their allotment is also shown separately.

b)  B-HNI category which is the Big HNI category who invest above Rs10 lakhs and there is no upper limit for such B-HNI investors.

c)   When the subscription status is presented by the exchange on a daily basis, it shows the S-HNI category separately, the B-HNI category separately and also the consolidated HNI picture of both of them combined.

How Can HNIS Apply for an IPO?

HNIs opting to invest in IPOs must fill out the Application Supporting the Blocked Amount (ASBA) form. They can only make minimum investments of Rs2 lakhs, not below that. In the event that they are shortlisted for allotment, the relevant amount is blocked and on the date of allotment the amount is blocked. HNIs can either access the IPO application through their net banking account or by physically submitting the IPO application. Let us now look at the steps to follow to apply to IPO as an HNI through net banking:

  • The first step is to access your internet banking portal. Log in to your internet banking account using user name and password
  • Check out for the IPO tab, and find "IPO Application" button. This will redirect you to the online IPO application system where , you can select the HNI category
  • Once you are inside, you can go ahead and bid for the lots presented. In the HNI category, remember to bid for minimum amount of Rs200,000 to be valid.
  • IPO system does not permit HNIs to bid at the cut-off price, unlike retail. The amount blocked is the highest bid amount of the range. Block your application amount and wait until the final allotment.
  • If you are allotted shares in the HNI category, the amount you blocked will be debited from your account and lien removed for the amount not debited.
  • If there is an oversubscription of shares, you only get partial allotment of IPO and the debit amount will be proportionately reduced.

Here are some concluding thoughts on the HNI allotment of shares. Unlike retail, HNIs cannot get discount on IPOs. For the S-HNI category, the same allotment rules as base minimum lot allotment and then lottery system is followed.

FAQs on IPO Application for HNI Category

Can anyone apply in the HNI category for IPO?

A person with over two crores of investable assets is classified as a high networth individual. While applying for an IPO, the minimum amount required to classify under the HNI category is Rs. 2 lakhs.

Is there any lock in period for the HNI category IPO?

There is no lock-in period for the HNI category; if IPO shares are allocated, they can be sold on the day of listing itself.

What are the disadvantages of the HNI category in IPO?

  • An HNI IPO application cannot be withdrawn or revised once it is places.
  • HNIs are not eligible to bid at a cut-off price. They must bid at a fixed price to buy the IPO shares.

What is the cut-off price for HNI IPO?

Unlike retail investors, HNIs are not eligible to bid at the cut-off price. They must bid at a fixed price in the price range of the issue.