Investing in Initial Public Offerings (IPOs) gives high-net-worth individuals (HNIs) an opportunity to increase their wealth by participating early in financially growing companies. However, the process for HNIs will differ from what is available to retail investors. If you are new to IPOs, understanding the rules, timelines, and procedures can save time and increase your chances of securing shares. In this guide, we will walk you through the HNI IPO application process in simple, practical steps.
What Is an HNI in IPO Terms?
An HNI, or High Net-Worth Individual, is someone who applies for IPO shares worth more than ₹2 lakh. HNIs fall under the Non-Institutional Investor (NII) category, which is distinct from retail investors. Unlike retail investors, HNIs often have higher chances of allotment since their applications are large and proportional to the IPO size. SEBI recommends this category for serious investors who want to invest large sums in popular IPOs and avoid the retail lottery system.
IPO Application Process for HNIs
1. Choose the Right IPO
Before you apply, do your own research on the IPO. Additionally, research the company, including its financials, growth plans, and market trends.
Investigate the prospectus for important information. Most High-Net-Worth Individuals (HNWIs) consider valuation and long-term growth versus making a quick return on investment.
2. Confirm Your Application Amount
Your application amount must exceed ₹2 lakh to qualify in the high-net-worth category. For example, the offering is 15 shares. Assume the shares are priced at ₹300; this means submitting 7 lots, totalling ₹3,150. You must always verify that the amount you are applying for exceeds the high-net-worth threshold. It is essential to submit your application correctly to avoid falling back to retail-level investment.
3. Choose the Application Method
ASBA (Application Supported by Blocked Amount):
- Preferred for amounts above ₹5 lakh.
- The application amount remains blocked in your bank account until it’s allotted.
UPI (Unified Payments Interface):
- Applicable for smaller amounts up to ₹5 lakh.
- The application amount remains blocked in your bank account and is debited only if shares are allotted.
- If you don’t receive an allotment, the blocked amount is released automatically to your account.
4. Access Your Investment Platform
Log in to your bank’s net banking portal or a brokerage platform. Navigate to the IPO section. HNIs should ensure their accounts are active and linked to their Demat accounts, as all allotments happen electronically.
5. Enter Application Information
- Category: Choose Non-Institutional or HNI.
- Bid Quantity: Enter the number of lots you wish to bid on.
- Bid Price: Choose between a cut-off price or a specified price.
- Demat Account Number & PAN: Fill these in correctly to avoid rejection.
- UPI ID: Required for UPI Applications.
Again, accuracy is crucial. A minor mistake in the PAN or Demat account number would ultimately result in rejection.
6. Block Funds
After you finish the application, the ASBA or UPI system blocks the money in your account. If you are not allotted shares in the IPO or if a monetary adjustment happens, the blocked funds are released. It allows for a fluid and transparent transaction process.
7. Submit the Application
Once you have verified all information, you apply. You are given an acknowledgement number; preserve it to confirm your application status and follow up if necessary.
8. Check Allotment Status
HNIs typically only receive shares in proportion to their IPO application size. In practice, proportion means that if this IPO is 5 times oversubscribed, an HNI can only expect to receive shares in proportion to their application amount, if at all. To verify your allotment status, you can use your application platform or visit the registrar’s website.
Tips for HNI IPO Applications
- Diversify Applications: Use multiple family Demat accounts or entities to increase allocation chances.
- Monitor Subscription Status: This helps you understand demand and plan strategically.
- Stay on Top of Things: Review SEBI and exchange notifications regularly, as rules can change with little notice.
- Timing is Key: Apply early in the IPO process to avoid mistakes that can occur when applying at the last minute.
Why Choose Equentis Investech?
Equentis Investech delivers tailored IPO investment approaches for HNIs, and its team assists in assessing IPO fundamentals, trends in subscription, and allocation probabilities. With our guidance, you can apply quickly and effectively, strategically aligning IPO investments with your personal financial objectives. Equentis ensures that your investments are practical, with researched insights, and optimised for high-net-worth portfolios.
Whether it’s your first HNI IPO application or an advanced strategy, Equentis Investech makes the process seamless, informed, and result-oriented.
