HNI stands for High Net-worth Individual, a common market term for a wealthy investor who applies for a large amount in an IPO. It is not a formal category in SEBI’s rules. In an IPO, an investor who bids above Rs 2 lakh falls into the non-institutional category, which is then split into sNII for bids up to Rs 10 lakh and bNII for bids above Rs 10 lakh, and in everyday language both groups are often called HNI. The HNI category is important to watch because its subscription is often the highest in popular IPOs and it can swing sharply on the last day, as many bids are funded by short-term loans and are reduced or cancelled after allotment. HNI investors cannot use the retail quota, and they cannot place bids above Rs 2 lakh in the retail category, because the retail ceiling applies to individual applications. The HNI quota is allotted by lottery in the case of oversubscription, and the minimum quantity is one lot. When reading subscription tables, compare HNI demand with retail and institutional demand before drawing conclusions.
Example: An investor applies for Rs 5 lakh of shares in an IPO. This bid is above the Rs 2 lakh retail cap, so it goes into the non-institutional category as an sNII bid, often referred to as an HNI bid.