Investing in IPOs through the HNI (High Net Worth Individual) category is popular among investors who want higher exposure and potentially better listing gains. However, HNI IPO allotment rules are very different from retail IPO allotment, and misunderstanding them can lead to unexpected outcomes.

This blog explains HNI IPO allotment rules in India, eligibility, minimum investment, oversubscription logic, funding impact, strengths, risks, FAQs

What Is HNI Category in IPO?

HNI category in an IPO is meant for non-institutional investors (NIIs) who apply for shares above ₹2 lakh.
It is further divided into:

• Small HNI (sHNI) – ₹2 lakh to ₹10 lakh
• Big HNI (bHNI) – Above ₹10 lakh

Both follow different allotment rules compared to retail investors.

HNI IPO Allotment Rules Explained

1. Minimum Investment Rule

• Minimum application amount: More than ₹2,00,000
• Application must be in lot multiples
• Any application below ₹2 lakh is shifted to retail category

2. No Lottery System in HNI IPO

• Unlike retail IPOs, there is no lottery-based allotment
• Allotment is done on a proportionate basis

3. Proportionate Allotment Rule

• Shares are allotted in proportion to the number of lots applied
• Higher application = higher chance of allotment
• Even after applying for large amounts, full allotment is not guaranteed

4. Oversubscription Impact

• If HNI category is oversubscribed:
  • All applicants receive reduced allotment
  • Allocation depends on oversubscription ratio
• Example:
  • If oversubscription is 10x → You get ~10% of applied shares

5. Small HNI vs Big HNI Allotment

• sHNI and bHNI have separate quotas
• Big HNI usually faces higher competition
• Allotment percentage varies for both categories

6. IPO Funding & Leverage Rule

• Many HNIs use IPO funding (leverage)
• Funding does not improve allotment chances
• Allotment depends only on total applied lots

7. ASBA Blocking Rule

• Entire application amount is blocked in bank account
• Only allotted amount is debited
• Remaining funds are unblocked after allotment

8. Cut-Off Price Rule

• HNI investors must bid at cut-off price
• Lower price bids risk rejection

9. One PAN, One Application Rule

• Multiple applications using the same PAN are rejected
• Joint accounts still count as single PAN

10. No Guaranteed Allotment

• Even large applications do not guarantee allotment
• Extremely oversubscribed IPOs may result in very small allocation

Advantages of HNI IPO Investment

• Higher allocation compared to retail

• No lottery-based uncertainty
• Proportionate allotment mechanism
• Access to IPO funding options
• Potential for large listing gains
• Useful for short-term IPO strategies

Disadvantages of HNI IPO Investment

• No guaranteed allotment

• High capital blocking
• Loss amplification due to leverage
• GMP-based strategies can fail
• Listing losses impact large capital
• Interest cost on IPO funding
• Lower liquidity post listing

Frequently Asked Questions (FAQs)

1. Is HNI IPO allotment guaranteed?

No. HNI IPO allotment is never guaranteed, even for very large applications.

2. How is HNI IPO allotment calculated?

Allotment is done on a proportionate basis depending on oversubscription.

3. What is the minimum amount for HNI IPO?

More than ₹2 lakh is mandatory to qualify as HNI.

4. Does IPO funding increase allotment chances?

No. Funding increases application size but does not change allotment rules.

5. Is HNI IPO better than retail IPO?

HNI IPO offers higher allocation potential, but also carries higher risk.

6. Can NRIs apply in HNI IPO category?

Yes, NRIs can apply under HNI/NII category subject to bank & broker rules.

7. What happens if HNI IPO is undersubscribed?

You may receive full allotment if the category is not fully subscribed.