How to Apply for an IPO Under HNI Category?
Recently, there have been many IPOs in the market. Businesses use this approach to raise capital. Moreover, it enables investors to invest in high-quality businesses. No wonder the initial public offering (IPO) has become a popular investment method.
High-Networth Individuals (HNI) fall under the non-institutional investor (NII) category. Later in this blog, we discussed different categories of investors in an IPO subscription.
How to Apply for an IPO under the HNI Category on Groww?
Retail investors who wish to invest up to Rs 2 lakh must fill out the ASBA (application supporting the blocked amount). A debit from the account only occurs if the investor is shortlisted for the allotment. Investors who have an account with Groww can apply for an IPO under the High Network Individual (HNI) category through the Groww app. Here's how to apply for IPO under the HNI category on Groww:
Step 1: Open the Groww app (you can apply for the IPO on the Groww website as well) and log in to your account. If you do not have an account, you can sign up by creating a new account.
Step 2: Click on the IPO tab on the main screen. You will see a list of IPOs that are ‘Open Now’, ‘Recently Closed’, ‘Upcoming IPOs’ and ‘Recently Listed Stocks’.
Step 3: Click on the Apply button for the IPO that you wish to subscribe to.
Step 4: Select the option 'Apply as High Network Individual' from the drop-down menu.
Step 5: On the IPO page, you will see two options – the number of shares you wish to bid for and the bid price. Enter the number of lots and the price you want to bid. The total amount should be more than Rs 2 lakhs.
Step 6: The HNI cannot choose the cut-off price. Therefore, a block mandate at the highest bid price is created in the account. By doing this, you will block the amount of the application till the final allotment.
Step 7: A debit from the account will occur only after the allocation of shares.
Step 8: Now, enter your UPI ID and click 'Continue'.
Step 9: You will receive a mandate request on your UPI app after 24 hours.
Step 10: Approve the payment request to successfully apply for the IPO.
Companies | Type | Bidding Dates | |
| Regular | Closes 23 Dec | ||
| Regular | Closes 23 Dec | ||
| SME | Closes 23 Dec | ||
| Regular | Closes 23 Dec | ||
| Regular | Closes 23 Dec |
Different Types of Investors in an IPO
Diverse types of investors can subscribe to shares of businesses through an IPO. For each category, there is a reserved percentage of shares. The following is a list of different types of investors.
1. Retail Individual Investors (RII)
- An NRI, a HUF, or an Indian Resident individual applying with up to Rs 2 lakh in funds falls under this category.
- This category reserves at least 35 per cent of the total IPO offer.
- It allows bids at cut-off prices. In addition, RII investors can withdraw their bids up until allotment day.
- In an oversubscribed IPO, the allotment shall be the minimum bid lot. If there is no oversubscription, then allocation will be in full.
2. Non-institutional Investors (NII)
- These include all applicants for IPOs over the amount of Rs 2 lakh. It includes NRIs, HUFs, corporations, Indian individuals, and trusts.
- The Non-institutional investors reserve 15% of the total IPO offer.
- High net-worth individuals (HNIs) fall into this category. They differ from other investors regarding their investible surplus and net worth, which is more than two crores.
- Investors cannot bid at the cutoff price. Also, they cannot withdraw their bid before the allotment.
- In the event of oversubscription, allotments are proportionate.
3. Qualified Institutional Buyers (QIB)
- Public financial institutions, mutual funds, and foreign portfolio investors can apply in this category.
- It is not as common as other categories.
- The IPO offer for this category must be a minimum of 50%.
- Institutions must register with SEBI before applying.
- Investors cannot bid at the cut-off price. Additionally, they cannot withdraw their bid even after the close of allotment.
Final Thoughts
So now you know how to apply in the HNI category, though many investors still wonder whether to invest as a retail or HNI investor. First, consider the company details and its market demand. Next, check if you have the funds to apply for the IPO. Then, choose your investment strategy.
If you have any questions, you can always consult a financial advisor.
Key Takeaways
- HNIs are people with over two crores of investable assets.
- HNIs cannot invest less than Rs 2 lakh in an IPO. They are not eligible for any discounts offered by the company.
- An HNI should receive at least one share lot in oversubscription of IPO. An HNI won’t receive any allocations if it isn’t oversubscribed.
- You cannot apply for both the RII and HNI categories.
- Until the allotment of shares, there will be no debit from your bank account.
FAQs
Q1: Can I apply to both the HNI and retail categories in an IPO?
Answer: No, an individual cannot apply in the retail and HNI categories. Rejection is likely if he does this.
Q2: If an investor invests more than Rs 2 lakh in an IPO, does he automatically fall into the HNI category?
Answer: All investors who invest more than Rs 2 lakh in an IPO will be in the HNI category.
Q3: When I apply for an IPO in the HNI category, does that guarantee the allotment of shares?
Answer: A HNI will receive full allocation if there is no oversubscription. If there is an over-subscription, then the allotment will be proportional.
Q4: What do you mean by the term cut-off price in an IPO?
Answer: Only RIIs have access to this option. Investors don’t have to select a price when applying. Instead, investors receive shares at this price.
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