Should you apply for an IPO in HNI Category?
You cannot apply for an IPO via Retail and HNI categories simultaneously. You can only apply either in the Retail category or in the HNI category. There is a high chance for your application to get rejected if you apply in both categories.
Hence, an investor must first understand the advantages and disadvantages, in detail, before making a decision to apply for an IPO in HNI category.
|Consideration||Retail Route||HNI Route|
|Limit||Can bid for shares worth less than 2 |
|Should bid for shares worth more than 2 |
|Allotment Guarantee||Allocation is not guaranteed. In case of |
oversubscription, shares will be
allocated based on a lottery system
|Allocation is guaranteed*. In case of |
oversubscription, the allocation will be
proportional* to the amount bid
|Discount||Eligible for a discount the company |
|Not eligible for any discount the |
company may offer
|Cutoff Price Bidding||You can bid for the Cut off Price in |
|You won’t have an option to bid at the |
Note: Though allotment is guaranteed via HNI route, there are some disadvantages with the proportionate allotment criteria, especially when IPOs have a huge demand. There is a high chance for the issue to get oversubscribed in multiples of hundreds, reducing the total number of shares you can get for the same amount. If the proportionate shares that you could get do not equal to at least one lot, you wouldn’t receive any allocation.
HNI category in Mrs Bectors Food IPO was oversubscribed 621 times, so an HNI subscriber will get 1 share for every 621 shares he bid i.e 1 share per every ₹1,78,848 rupees (₹288×621, Issue price – ₹288). To get one lot of Mrs Bectors Food (50 shares), you should have bid with an amount equal to ₹89,42,400; approximately ₹90 lacs.
whereas, HNI Category in Antony Waste Handling Cell IPO was oversubscribed 18.69 times, so an HNI subscriber will get 1 share for every 18.69 shares he bid i.e 1 share per every ₹5,887 rupees (₹315×18.69, Issue price – ₹315). You would have got one lot of Antony Waste Handling Cell (47 shares), with just ₹2,76,704, approximately ₹3 lacs.
Instructions to apply for an IPO in HNI Category:
- Subscriber logs into the net-banking portal of his bank account.
- The subscriber checks for the IPO section and selects the “IPO Application” which redirects him/her to the IPO Online System
- Subscriber inputs the required information in the form by selecting HNI category and inputting the number of lots he would like to bid and the price at which he would like to bid them for (overall amount should be greater than Rs. 2 lakhs).
- A block mandate is created in the account on the total amount at the highest price bid by the subscriber. (The subscriber cannot choose the cutoff price option like he could in the Retail Category)
- Application money will remain blocked up to the finalization of allotment, till the refund date announced by the registrar of the IPO
- Application money is debited only after the allotment of shares.
- Post allotment finalization, funds will be either fully or partially debited or refunded.Full Allotment – Funds will be completely debited when the IPO is not fully subscribed in the HNI category, all the lots applied by will be allocated to the subscriber
- Partial Allotment – When there is oversubscription, shares proportionate to the bid amount will be allocated to the subscriber, partial funds will be unblocked