How to Apply for an IPO Under HNI Category?

An Initial Public Offering (IPO) enables investors to subscribe to a company’s shares during its public market debut. In India, IPO applications are structured under different investor categories, each governed by specific eligibility thresholds, bidding formats, and allotment mechanisms.

This article explains how IPO applications operate under the High Net-worth Individual (HNI) category, covering category classification, eligibility parameters, regulatory framework, application flow, allotment structure, and commonly referenced IPO terms.

The HNI category in an IPO refers to applicants whose IPO subscriptions exceed ₹2 lakh per application. In India, IPO subscriptions are classified into Retail Individual Investors (RIIs), Non-Institutional Investors (NIIs), and Qualified Institutional Buyers (QIBs).

Applications exceeding the retail threshold fall under the Non-Institutional Investor (NII) category, commonly referred to as the HNI segment. This category permits higher application values and follows allocation rules distinct from the retail segment, as prescribed by the Securities and Exchange Board of India (SEBI).

Applications under the HNI category in IPOs are subject to defined eligibility and documentation requirements as prescribed by SEBI. These criteria distinguish non-institutional investors from retail applicants based on application value and classification.

Key eligibility conditions include:

• Minimum investment amount: The total application value must exceed ₹2 Lakhs per IPO application, which places the bid in the Non-Institutional Investor (NII) category.
  

• KYC compliance: Applicants are required to complete Know Your Customer (KYC) verification using valid documents such as PAN and approved identity proofs.
  

• Demat account: An active demat account linked to a bank account is required for IPO applications and electronic credit of shares.
  

• Category selection: The IPO application must be submitted under the NII/HNI category at the time of bidding.
  

• Application controls: Multiple bids may be placed subject to PAN-based restrictions and applicable SEBI regulations. Applications across retail and HNI categories using the same PAN are not permitted.

The participation of High Net-worth Individuals (HNIs) in Initial Public Offerings is governed by regulatory provisions issued by the Securities and Exchange Board of India (SEBI). Under the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, HNI applications fall within the Non-Institutional Investor (NII) category.

Key regulatory aspects applicable to the HNI category include:

• Investment threshold: Applications with a bid value exceeding ₹2 lakh are classified under the NII category and are commonly referred to as HNI applications.
  

• Category-wise allocation: A specified portion of the IPO issue size is reserved for Non-Institutional Investors, separate from the retail and qualified institutional buyer segments, in accordance with the issue structure disclosed in the offer document.
  

• Application mechanism: IPO applications under the HNI category are required to be submitted through the ASBA (Application Supported by Blocked Amount) framework, ensuring funds remain blocked until allotment finalisation.
  

• Allotment methodology: In case of oversubscription, allotment to HNIs is carried out on a proportionate basis, as prescribed by SEBI regulations, rather than through a lottery system.
  

• PAN-based application control: SEBI mandates the use of a valid Permanent Account Number (PAN) for IPO applications, restricting multiple category applications using the same PAN.
  

• Disclosure and reporting: Registrars and intermediaries are required to process, verify, and report HNI subscription data in line with SEBI’s disclosure and transparency norms.
   

These regulations ensure that IPO participation by HNIs is structured, transparent, and aligned with uniform allocation and settlement standards across investor categories.

IPO applications under the High Net-worth Individual (HNI) category are processed through the Non-Institutional Investor (NII) segment for bids exceeding ₹2 lakh and follow SEBI-prescribed mechanisms, including mandatory fund blocking through ASBA.

Step 1: Accessing the IPO Application

Applications are submitted through SEBI-registered stockbrokers or authorised online platforms. During entry, the investor category is selected as NII/HNI, which applies to applications above the retail threshold.

Step 2: ASBA-Based Fund Blocking

All HNI IPO bids are routed through the Application Supported by Blocked Amount (ASBA) framework. The bid amount is blocked in the linked bank account and remains unavailable until the allotment process is completed. Only the allotted portion is debited.

Step 3: Placing the Bid

Bids are entered within the IPO’s announced price band and in accordance with prescribed lot sizes. Applications exceeding ₹2 lakh are recorded under the NII segment.

Step 4: Bid Submission and Mandate Confirmation

Once the bid is submitted, the ASBA mandate confirms blocking of the corresponding amount. The funds remain earmarked until allotment finalisation.

Step 5: Allotment and Credit of Shares

After the issue closes, applications are processed by the registrar based on subscription levels. In oversubscribed IPOs, shares are allotted on a proportionate basis as per SEBI norms and credited electronically to the investor’s demat account. Blocked funds are adjusted or released based on the allotment outcome.

IPO allotment under the HNI category follows defined allocation principles:

• Proportionate allotment: In oversubscribed issues, shares are allotted in proportion to the application size.
  

• No lottery mechanism: Unlike the retail category, HNI allotment is not based on a draw of lots.
  

• Price-based consideration: Applications are considered based on bid price and quantity within the price band.
  

• Fund adjustment: Unallotted or partially allotted application amounts are released after allotment finalisation.

The following terms are commonly referenced during IPO applications under the HNI category:

• Bid lot: The minimum number of shares that constitute one valid bid, as specified in the IPO details.
  

• Bid price: The price selected by the applicant within the IPO price band.
  

• ASBA: Application Supported by Blocked Amount, a mechanism under which the application amount is blocked in the bank account until allotment.
  

• Block mandate: Authorisation provided to the bank to block funds for the IPO application.
  

• Cut-off price: The final issue price determined after completion of the book-building process.
  

• Application form: The electronic or physical form used to submit an IPO bid through a broker or authorised platform.

IPO applicants are categorised based on application value and regulatory classification, which determines allocation methodology:

• Retail Individual Investors (RIIs): Individual applicants applying for shares up to ₹2 lakh per IPO application. This category includes resident individuals, NRIs, and HUFs applying within the retail threshold.
  

• High Net-worth Individuals (HNIs) / Non-Institutional Investors (NIIs): Applicants applying for shares exceeding ₹2 lakh, including individuals and eligible non-institutional entities such as trusts and companies.
  

• Qualified Institutional Buyers (QIBs): SEBI-registered institutional investors such as mutual funds, banks, insurance companies, and foreign portfolio investors.
  

• Anchor investors: A sub-category of QIBs that participate before the public issue opens, subject to specific allocation and disclosure requirements.
  
  

Each category follows distinct allocation norms as specified in the IPO offer document and applicable SEBI regulations.

IPO applications under the HNI category operate within the Non-Institutional Investor (NII) segment and involve specific structural features and procedural considerations.

Higher application value: Enables IPO bids exceeding ₹2 lakh, placing applications outside the retail category.

Separate allocation segment: Shares are allotted within the NII portion of the issue, distinct from retail and institutional segments.

Access to primary market offerings: Allows participation in new listings with larger application sizes.

Higher capital commitment: Entry into this category requires investment amounts above the retail threshold.

Proportionate allotment mechanism: In oversubscribed issues, share allocation is carried out on a proportional basis as per applicable norms.

Post-listing price variability: Market prices may fluctuate after listing, influencing realised outcomes.

Documentation accuracy: Successful processing depends on correct KYC, demat account, and linked bank details.

Applications under the HNI category may encounter the following procedural challenges:

• Application rejections: Errors in KYC details, category selection, or application data may result in rejection.
  

• Blocked funds: The ASBA mechanism blocks the application amount until allotment finalisation.
  

• Submission timelines: Delays in mandate approval or missed subscription windows can affect application processing.
  

• Allotment interpretation: Proportionate allotment in oversubscribed issues may lead to partial allocation.

Applying under the HNI category in an IPO involves defined eligibility thresholds, category selection, and proportionate allotment mechanisms. The process follows SEBI-prescribed norms for non-institutional investors and differs from retail applications in terms of investment value and allocation structure. Understanding these elements provides clarity on how IPO participation functions under the HNI segment.

This content is for educational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.