HNI stands for High Net-Worth Individual. Since this group pertains to individual investors who invest with substantial money, it is specifically outlined in the Non-Institutional Investors part of the India IPO investing guide. Additionally included in the Non-Institutional Investors (NII) group are NRIs, HUFs, FPIs, Trusts, and Companies.
According to SEBI regulations, High Net-Worth Individuals, or HNIs, benefit from a 15% reserve of IPO shares in a private firm. HNIs frequently invest in IPOs with a minimum of ₹2,000,000. If the stock they purchased performs well, they will have the opportunity to cash out their earnings in just seven days.
Application Process for HNIs in IPO
HNIs who choose to invest in initial public offerings (IPOs) must submit an ASBA, or Application Supporting the Blocked Amount. The money (minimum 2,00,000) that they had set aside for the IPO stock would thereafter be taken from their accounts if they are selected during allocation.
As an HNI, you are unable to apply to IPOs through discount brokers using UPI methods rather than you must have access to a net banking account or physically submit the application.
The following is a list of the steps you must do to apply to an IPO as an HNI using net banking:
- You must first log into your online banking portal. Access your online banking account.
- Find the “IPO Application” button under the IPO tab. After that, you will be sent to the online IPO application portal.
- Pick the HNI category after the page has loaded.
- Bid on the lots that are being offered; the total sum should be greater than 2,000,000.
- HNIs are not allowed to set the cut-off bid price under the IPO procedure. The highest bidder automatically blocks it. Hold off on paying your application fee until the final allocation.
- The money you banned will be taken out of your account if you are given the shares.
- If there has been a share oversubscription, you will only get a portion of the IPO allocation, and the debit amount will be similarly reduced.
Additional Information for HNI in IPOs
There are a few more factors that influence this investment, in addition to the need that HNIs spend a minimum of 2,000,00 in IPOs
- Over 2 crores worth of investable assets are held by HNIs in total.
- HNIs are not eligible to get any discounts for IPO stocks from the issuing business.
- An HNI gets the following in an oversubscribed IPO:
- If the bid amount is equal to or more than oversubscriptions in the same (NII) category, one lot will be guaranteed.
- In the event of a small oversubscription, the minimum lot and some of the remaining shares according to the bid size
- When there is a significant oversubscription, the allocation process is lottery-based.
Conclusion
You may make some serious money from investing in IPOs if you are a High Net Worth Individual. Investing in the appropriate lots at the right time is the key. All you need to invest in initial public offerings (IPOs) is a net banking setup and an appropriate bank balance because the entire procedure is done online, thus inconvenience is not a problem.
Frequently Asked Questions
Typically, you’ll need your PAN (Permanent Account Number) card, a demat account, and a bank account linked to your demat account. Ensure your KYC (Know Your Customer) details are up-to-date.
While there are no specific restrictions, the minimum application size and the number of shares you can apply for may vary from one IPO to another. Check the IPO prospectus for specific details.
If your application is not allotted any shares, you will receive a refund of your application money. You can consider participating in other IPOs or exploring alternative investment opportunities.
