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Which category of investors, HNI or retail has a better chance of IPO allotment?

In an IPO application process, retail Investors are those applicants who apply for an IPO worth less than Rs 200,000 while HNI (high net-worth individuals) are investors whose bid amount is greater than Rs 2 lakh. The IPO bidding amount of small HNIs ranges from Rs 2 lakh – Rs 10 Lakh whereas Big HNIs bid for more than Rs 10 lakh. IPO investors generally have a question that which category whether HNI or retail has a higher chance of IPO allotment. Because investors placing multiple IPO applications (via 3rd party or with a different bank account) may sometime didn’t get the allotment while one who has applied just application may get the allotment. So you first have to understand the IPO allotment process.

Now, the important point to note is HNI category applicants invest a big chunk of money whereas retail investors can even purchase just 1 lot. Due to the higher investment amount, the HNI category generally has less number of total applicants than the retail category therefore, the probability of IPO allotment increases, but before applying, you must be aware that HNI investors cannot bid at the cut-off price and they cannot withdraw their IPO bids.

Important Points to note:

  • In the Retail category, allotment will be 1 lot whereas, in the HNI category, allotment will be for 13 or 14 lots (in both SHNI and BHNI), this is when an IPO oversubscribes.
  • The number of applications in retail is much higher compare to SHNI and BHNI.
  • The more application, the chances of the allotment window getting shorter. So to conclude this, with reference to the Past “Basis of Allotment” document, a ratio of allotment increased from retail to SHNI to BHNI.

Note: There is no thumb rule for the above conclusion; it’s just past analysis where IPO has been heavily oversubscribed say above 20x and so on.

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