Introduction

Initial Public Offering (IPO) is a company making a debut in the public market. This is a unique opportunity for you to become a part of its exponential growth. As a High-Net Worth (HNI) investor, you too can participate in this investment opportunity. To do so, it is worth understanding the specific considerations, benefits, and process. HNI is a distinct category for making larger investments, which can lead to significant returns. Refer to this guide to understand how to apply for IPO in HNI category.

What is HNI in IPO?

HNI full form in stock market is High-Net Worth individuals. It refers to people in the category who are capable of making large investments. If you come under this category, you can apply for shares exceeding Rs. 1 lakh in an IPO. According to the Securities Exchange Board of India (SEBI), making IPO applications above this amount, classifies you under the HNI category in IPO. To further classify, HNI falls under the subset of the Non-Institutional Investors (NII) segment. This includes individuals entities such as Hindu Undivided Families (HUFs), companies, Non-Resident Individuals (NRIs), etc. 15% of IPO shares are reserved for HNI category.

How to apply for IPO in HNI category?

The application process for IPO for HNI investors is slightly different from retail investors. Here’s a step-by-step guide:

1. Check Eligibility: As an HNI, you need a minimum of Rs. 2 lakh as an investment in IPO.

2. Choose the IPO: Once you are certain you qualify, research and select the IPO that meets your investment goals.

3. Fill out the application: To submit your application, you can log into your broker’s platform and navigate to the IPO section. Choose the HNI category after selecting your preferred IPO. Enter the number of lots you want to invest in and select the bid price.

4. Make payment: You need these two things to pay in the HNI category.

• UPI (Unified Payments Interface): If your application for IPO is up to Rs. 5 lakh, you can pay through your registered UPI ID.

• ASBA (Application Supported by Blocked Amount): For amounts exceeding Rs. 5 lakh, Application Supported by Blocked Amount (ASBA) via net banking is a mandatory requirement. Under this method, the bank will block the required funds in your account.

5.  Refund of Allotments: Once you submit the application, the IPO shares will be allotted. However, you cannot withdraw your application or reduce the size of your investment once applied. In case you receive fewer shares than applied for during the allotment process, you will receive the unutilised funds. They are either unblocked or refunded.

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Benefits of HNI in IPO

Investing in IPO under the HNI category involves the following benefits:

·   Potential for Greater Returns

As you bid for a larger allocation of shares as an HNI, you stand to gain more if your selected shares perform well post-listing.

·   Flexibility in Bid Price

You have the freedom to place bids at different price points. Since you are already investing at a higher limit, you need not rely on a cut-off price. This helps you in strategic investment planning without any major restrictions.

·   Reserved Quota

As discussed, according to SEBI regulations, a specific portion of shares are allocated to non-institutional investors, including HNIs. This improves your chances of allotment compared to the retail segment.

·   Higher Investment Limits

Unlike retail investors who can apply for a maximum of Rs. 2 lakhs, as an HNI, you can invest in significantly larger amount. Hence, you can get a bigger allotment.

·   Access to premium IPOs

Many highly anticipated IPOs are easily accessible when you are an HNI. You get to tap into such IPOs early, sometimes ahead of retail investors.

·   Better portfolio diversification

As you participate in multiple IPOs under the HNI category, you can diversify your portfolio across sectors and market caps. As a result, the concentration risk is reduced and you can explore diverse opportunities to enrich the quality of your portfolio.

·   No upper investment limit

This is one of the major benefits for HNIs in IPO. The applications involve no upper investment cap. You can allocate as much capital as you’d like. However, this may be subject to broker and their funding limits.

Conclusion

HNI category in IPO allows you to make substantial investments and provides the potential to earn significant returns. To make the most of it as an HNI, you need to carefully understand the requirements, rules, and the application process. All of which is highlighted in this blog for your easy understanding. Once you have clarity on the nuances of how to apply for IPO in HNI category, you can navigate the process efficiently and make informed decisions. With this equipped knowledge, explore the IPO segment confidently!

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