How to Apply for an IPO Under HNI Category?

Individuals can apply for an IPO under the retail category or the HNI category, also known as the non-institutional investor (NII) category. To apply for an IPO under the HNI category, individuals need to ensure they have the required funds, either from their resources or borrowed. The HNI category typically allocates 15% of any IPO. To apply for an IPO under the HNI category, it is essential to know how to apply and ensure the necessary funds are available. Keep reading to learn more about all the components related to HNIs in Initial Public Offerings, including the HNI IPO allotment rules​, their benefits, types, and how to apply for IPO in the HNI category. 

What is the HNI Category in IPO?

The High Net Worth Individual (HNI) category in an IPO is designated for individuals with a significant investable surplus inclined to invest substantial sums in IPOs. This category enables them to apply for shares with higher investment amounts than retail investors. It is noteworthy that the HNI application for an IPO is divided into two subcategories, each with its investment thresholds and benefits. Understanding the HNI IPO allotment rules helps investors navigate the process efficiently, ensuring they meet the necessary criteria and increasing the chances of getting an IPO in the HNI category.

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How to Apply for IPO in HNI Category on BlinkX

Here’s how to apply for an IPO in the HNI category​ on BlinkX. Follow the instructions mentioned below.

• Step 1: Log into your BlinkX account.
• Step 2: Go to the IPO section and select the desired IPO.
• Step 3: Choose the HNI category and enter your bid information. (including the number of shares and price)
• Step 4: Finish the payment process and submit your bid.
• Step 5: Keep track of the allotment status after the IPO closes.

Eligibility Criteria for HNI Category

As per the HNI IPO allotment rules​, investors need to follow certain guidelines to be eligible for the category. Here is a general outline of the eligibility criteria for the HNI category. 

• Any IPO must have an investment amount of more than ₹2 lakh to be classified under the category of HNI. Those who apply for shares over ₹2 lakh through an IPO are subject to the HNI category.
• Indian residents along with non-Indian residents are allowed to apply under the category of HNI subject to the minimum investment level.
• HNIs fall into the category of non-institutional investors when applying for an IPO. The category is strictly for those who make higher investments as compared to the retail investor.
• During the cutoff price, high net-worth individuals in IPO are not allowed to bid. 
• High net-worth individuals in IPO can customize their bids upward but not downward. 
• If there is an oversubscription, then individuals will only receive a proportionate share of the applied allotment, rather than the total requested amount.

Types of HNI Category

Here are the types of HNI categories.

• S-HNI Category:
  The S-HNI category bridges the gap between retail investors and the higher level of the HNI segment, allowing investments from ₹2 lakh to ₹10 lakh in a single IPO. Applications in this category receive distinct allotment disclosures, promoting transparency and personalized review. 
• B-HNI Category:
  Among the HNI investment options, the B-HNI category, or the Big HNI category, has no upper limit and starts from ₹10 lakh. Typically, this category presents limitless access and allocation capacity for investors with significant capital to invest in IPOs. 

The stock exchange issues separate and discrete subscription status updates for these two subcategories every day. These updates provide subscription numbers for both S-HNI and B-HNI groups independently, making it possible to view complete information about market demand and opinion in this particular area.

How is allotment in the IPO HNI category conducted?

The IPO allotment process in the HNI category is carefully managed to ensure fairness and efficiency. Here's a breakdown of the IPO allotment process for HNI​.

Proportionate Allotment

Initially, the allotment in the HNI category is usually carried out proportionately. This implies that the total number of shares available for distribution is divided among HNI applicants according to the quantity of their bids. In simpler words, the greater your bid, the higher your allocation will be. 

Oversubscription Management

Oversubscription management occurs when there is more demand for shares than the number of units available, creating complexity in the allocation process. Companies and lead managers deploy various strategies for managing oversubscription effectively. 

• Lottery System: An approach to allocate shares among eligible HNI applicants is by deploying a lottery system. This ensures fairness and equal opportunity for all investors, regardless of the size of their bids.
• Predefined Allocation Criteria: Companies have the option to establish predetermined allocation criteria to prioritize specific investors or investment criteria. This may involve considering factors like the investment amount, duration of holding, or existing relationships with the company.

Benefits of Applying IPO in the HNI Category

HNI funding for IPO facilitates the initial growth and expansion of promising companies. Here are the benefits of HNI in IPO category.

• Possible Probability of High Allocation: 
  When individuals apply for IPO shares as an HNI, there is always a higher chance of getting shares allotted as compared to retail investors. That is because HNIs in IPOs generally invest large amounts of capital, making them more desirable candidates for allocation.
• Priority Allocation:
  Companies sometimes prioritize HNI investors when distributing shares in an IPO. This implies that despite the high demand for the shares, HNIs might still be more likely to acquire them before other investors.
• Increased Profit Potential: 
  A major advantage of being an HNI investor in an IPO is the potential for greater profits. By committing a larger initial investment, HNIs have the scope to earn larger rewards, if the IPO performs strongly post-listing on the stock exchange. Therefore, if your goal is high investment returns, the HNI segment might be the right choice for you.

Rules for Applying for IPO in HNI Category

After understanding the IPO allotment process for HNI,​ let’s understand the HNI IPO allotment rules​. 

• High Net Worth Individuals may apply for a share in Initial Public Offerings with an application for a minimum price of 2, 00,000 rupees. 
• The Authorized Person and the entire number of applications in the Non-Institutional Investors category determine the total number of shares of HNI in IPO.
• Shares in an IPO are typically assigned to HNIs within six working days of the offer's closing date.
• To be considered for HNI IPO allocation, the applications must be submitted before the NII category's cut-off time, usually 4 pm IST on the closing day of the IPO.
• Banks temporarily hold the bid amount specified by High Net Worth Individual (HNI) applicants. If the offer is made from the savings account, the investor will continue to receive interest on the deposited amount until the IPO process is concluded.  
• NRIs applying for IPO shares with a value of more than 2.00 lakh rupees are classified as High-Net-Worth Investors (HNIs). 
• High-net-worth individuals (HNIs) may bid for maximum equity shares, provided they do not bid for more than the total offer, except for the share reserved for QIBs.
• An IPO's Net Institutional Investor (NII) portion must constitute at least 15% of the total offer.

Conclusion
High Net Worth Individuals (HNWIs) can participate in Initial Public Offerings (IPOs) with companies highlighting significant growth prospects. By understanding the HNI IPO allotment rules and learning how to apply for IPO in HNI category investors can make informed decisions to capitalize on investment opportunities within the HNI asset class. Furthermore, using a reliable stock market app would streamline this, giving HNIs access to upcoming IPOs and real-time market data on their smartphones.