HNI IPO Application Guide (NII Allotment Rules, Benefits & Funding)

Published on Wednesday, August 4, 2021 by Chittorgarh.com Team | Modified on Monday, November 8, 2021

A high Net-worth Individual (HNI) is a retail investor who bids for more than Rs 200,000 equity shares in an IPO. It is an investor category defined in IPOs in India. HNI IPO applications are part of the Non-Institutional Investors (NII) portion.

HNI (High Net worth Investors) & NII (Non-Institutional Investors) can be considered the same. As per the SEBI rule, the issuing company should reserve a minimum of 15% of the IPO for the NII category.

Applying for IPO shares in the HNI category offers an opportunity to grab shares worth more than Rs 2 lakhs. It also increases the chance of allotment for retail investors. With easy IPO funding available in the market, an investor can make a quick and lot of money in just seven days. Most HNI investors take a loan worth 100’s of crores for each IPO.

HNI IPO Meaning

To invest in the HNI category of an IPO, you need to bid for more than 2 lakh rupees of Equity shares. You can bid for the HNI IPO application only through ASBA using the Net banking facility or by submitting the physical IPO application form. HNI’s cannot apply using the UPI-based IPO application offered by most discount stock brokers like Zerodha.

IPO HNI Category

HNI Category in an IPO is where you need to apply for more than Rs 2 lakh. HNI IPO application is part of (Non-Institutional Investor) NII reserved portion of IPO for allotment. As per IPO regulations in India, a minimum of 15% of the public issue is reserved for NII investors.

HNI IPO Rules

• The minimum IPO application amount for HNI is Rs 2 lakhs.
• HNI Allotment is on a proportionate basis or lottery system based on your application and NII over-subscription.
• IPO shares are allotted within six working days from the Bid/Offer Closing Date.
• The cut-off time to apply for IPO shares in the NII category is 4 PM IST on the issue closing date.
• Similar to retail applications, the banks block the bid amount for HNIs. If applied from a savings bank account, you will continue getting the interest earnings on the blocked amount.
• Maximum Bid by NII is the number of Equity Shares in the given lots not exceeding the size of the Offer (excluding the QIB Portion)
• HNI/NII category also includes NRIs applying for more than Rs 200,000.
• HNIs are not entitled to Bid at the Cut-off Price. They have to bid at a fixed price in the issue price range.
• Not less than 15% of the Offer is reserved for Non-Institutional Portion.
• NII bids are considered for allotment only when they are received at or above the Offer Price.

Difference between HNI and NII

IPO applications by HNI investors are considered part of the Non-Institutional Bidders (NII) category. Along with HNI investors, the NII reserved portion also includes NRIs, HUFs, Companies, FPIs, and Trusts.

The HNI and NII both represent the same NII category in an IPO for the retail individual investors.

Difference between HNI and Retail

Both High Net-worth Individuals (HNI) and Retail Individual Investors (RII) are individual people who apply for an IPO under two different reserved categories i.e. Retail and NII.

The Retail Portion is reserved for individuals who apply for not more than Rs 200,000 in an IPO. The HNI’s are individuals who apply for more than Rs 200,000. The HNI bids are considered under the (Non-Institutional Investor) NII portion.