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How to Apply in HNI Category for IPO

In the State of the Economy report for August, the Reserve Bank of India mentioned that 2021 could be the year of IPOs for India, making it one of the most popular investment methods for every category of investors.

Typically, investors can subscribe to IPO shares under three categories. They are:

In this article, we will concentrate on how one can apply for an IPO under the HNI category:

Who can bid under the HNI category

Investors who have investable assets of over ₹2 crores can bid under this category.

How to apply under the HNI category

You need to follow these steps when applying for IPO shares under the HNI category.

Upon successfully submitting the IPO form application, your application money will stay blocked until the allotment is finalised. The application money will be debited only after the shares are allotted.

How are the shares allotted to an HNI investor

Assume that you have applied for 400 shares of a company. Now there are two cases in which the allotment is carried out:

IPO was undersubscribed

In this scenario, you will get the number of shares you have subscribed for, which would be 400.

IPO was oversubscribed

Say the shares were oversubscribed 200 times. In this case, you will be allotted based on the formula number of shares applied by the number of times it was oversubscribed i.e. 400/200, which is two shares.

As an HNI investor, here are a few things you need to remember:

Conclusion

When deciding between the retail or the HNI category route to invest in an IPO, consider the market demand and the amount you can set aside for the IPO investment. Typically, HNIs are advised to wait until the last minute to subscribe to IPO shares to better understand the subscription and profits.

Irrespective of the category you choose, it is crucial to conduct due diligence, in-depth research, and analysis when applying for an IPO.

Categories: Trading 101