HNI is a commonly used term on business channels for super rich investors. It’s also a category that can be chosen when applying for IPO (Initial Public Offering).
The full form of HNI is High Net-worth Individual.
There is no specific net-worth number to be defined as an HNI in India.
Generally, any individual who has investible surplus of ₹ 5 crore or more is considered to be a ‘High Net-worth Individual’.
Investible surplus does not include investments in real estate. It also does not include any assets which have been purchased without the intention of getting returns from it.
For example, the house in which the individual lives, his farm houses or his cars – are not counted under the investible surplus.
The extra money that an individual has for investment in appreciating assets – is called as investible surplus.
In simpler words, if an individual has a house worth ₹ 5 crore. Car worth 50 lakhs and Bank Fixed Deposits worth 1 crore. He is not an HNI.
Even though his total net-worth including his house and bank deposits is more than 6 crore. His investible surplus or liquid money is only the 1 crore fixed deposit.
HNI Category in IPO
Any individual who invests ₹ 2 lakh or less are categorised as ‘Retail Investors’.
Any individual looking to invest ₹ 2 lakh or more is categorised under ‘HNI’ (High Net-Worth Individual).
Let’s take an example.
SBI Cards IPO took place recently. Many retail investors applied for one lot.
But what if there was an HNI who has a lot of money and wants to invest heavily in the SBI Cards IPO?
Well, he can.
This was the minimum and maximum lot size for Retail Investors (IPO application of 2 lakhs or less)
|Lots||Shares||Amount (755 per share)|
The maximum lot size for retail investor is 13, because 14 lots would take the total investment above 2 lakhs – which would be the HNI category.
HNIs can apply for 14 lots or more, without any upper limit.