How to Apply for an IPO Under HNI Category?

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 in the HNI category, individuals need to ensure they have the required funds, either from their own resources or borrowed. The HNI category typically allocates 15% of any IPO. To apply for an IPO in the HNI category, it is essential to know how to apply and ensure the necessary funds are available. This article is intended to clarify to an individual all of the components related to HNIs in Initial Public Offerings, including their benefits, types, and how to apply IPO in HNI category. 

What is 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 IPO is divided into two subcategories, each with its investment thresholds and benefits. 

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Table of Content

  1. What is HNI Category in IPO?
  2. Types of HNI Category
  3. Benefits of Applying IPO in the HNI Category
  4. How is Allotment in the IPO HNI Category Done?
  5. How to Apply for an IPO Under the HNI Category on BlinkX
  6. Rules for Applying for IPO in HNI Category:

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 Rs 2 lakhs to Rs 10 lakhs in a single IPO. Applications in this category receive distinct allotment disclosures, promoting transparency and personalised 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 Rs 10 lakhs. 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.

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 compare to retail investors. That is because HNIs in IPOs generally invest large amount of money, making them more desirable candidates for allocation.
  • Priority Allocation:

    Companies sometimes prioritise 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 chance to earn larger rewards, if the IPO performs strongly post-listing on the stock exchange. Therefore, if your goal is to upsurge investment returns, the HNI segment might be the right choice for you. 

How is Allotment in the IPO HNI Category Done?

In the IPO allotment in HNI category, the allotment process is carefully managed to ensure fairness and efficiency. Here's a breakdown of how it works: 

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 magnitude of their bids. In simpler words, the greater your bid, the greater 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 prioritise specific investors or investment criteria. This may involve considering factors like the investment amount, duration of holding, or existing relationships with the company.

How to Apply for an IPO Under the HNI Category on BlinkX

To apply for an IPO under the HNI Category on BlinkX, follow these instructions:

  1. Log into your BlinkX account.
  2. Go to the IPO section and select the IPO you want to apply for.
  3. Choose the HNI category and enter your bid information, including the number of shares and price.
  4. Finish the payment process and submit your bid.
  5. Keep track of the allotment status after the IPO closes.

Rules for Applying for IPO in HNI Category:

Here are the guidelines for HNIs applying for an IPO:

  • 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 Authorised 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 the IPO allocation, HNI applications, similar to those of retail investors, must be submitted before the NII category's cut-off time, usually 4pm 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.
  • Retail investors are not allowed to bid at cut-off prices.
  • An IPO's Net Institutional Investor (NII) portion must constitute at least 15% of the total offer.
  • HNI bids will only be considered for allotment if they are placed at or above the company's offer price.

High Net Worth Individuals (HNWIs) can participate in Initial Public Offerings (IPOs) with companies highlighting significant growth prospects. By comprehending the application process tailored for HNWIs, 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.

FAQs for How to apply for IPO in HNI category

According to regulatory bodies or financial institutions’ standards, High-Net-Worth Individuals (HNIs) are individuals who have substantial assets or high annual incomes. 

The share allocation is reliant upon the overall IPO subscription. In the event of oversubscription, the allotment will be proportionate. Conversely, if the IPO is not oversubscribed, HNIs will receive a complete allocation.

Generally, this is higher as compared to retail investors and starts at INR 2,00,000.

Allocation in the HNI IPO segment is generally determined by the magnitude of the investor's bid and the overall demand in shares during the IPO. 

Yes, Non-Resident Indians (NRIs) can apply under the HNI in IPO category, if they meet the eligibility criteria and invest the required minimum amount.