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Equity MFs invest Rs 3,380 cr in IPOs in December

The interest among Indian investors for Indian equities, positive returns, and the IPO frenzy in 2021 have primarily led to consistent investments by mutual funds in IPOs, said experts.

By Ruchit Purohit

Equity mutual funds continued to deploy funds in initial public offerings (IPOs) of companies during the month of December, despite weakness across the secondary markets amid weak global sentiment. However, the investments saw a drop from Rs 4,050 crore deployed in November to Rs 3,380 crore in December. The interest among Indian investors for Indian equities, positive returns, and the IPO frenzy in 2021 have primarily led to consistent investments by mutual funds in IPOs, said experts.

“The broad outlook for the markets has been positive despite the ups and downs, and appetite for equities among Indian investors continues to remain high. However, the month-over-month drop is mainly due to the number of issuances falling in December. Going forward, fund houses will continue to track offers based on the business models, growth potential, alongside other factors, irrespective of their sectors,” Akhil Chaturvedi, chief business officer, Motilal Oswal AMC, told FE.

According to a report by Edelweiss Alternative Research, equity mutual funds deployed around Rs 3,380 crore in fresh issuances during the month, with shares of Anand Rathi Wealth, RateGain Travel, Tega Industries, Metro Brands, CMS Info Systems, and MedPlus Health being the top bets. IPOs of MedPlus Health (Rs 1,300 crore) and Metro Brands (Rs 300 crore) were among the top bets from six mutual fund houses, whereas the public offering of CE Info Systems and Anand Rathi Wealth received investment from three mutual funds each. Besides, from the existing holdings of mutual funds, ICICI Bank, Wipro, Infosys, and HDFC Bank were among the top additions by fund houses. On the other hand, HCL Tech, RBL Bank, and Bharat Electronics were among the top reductions, the report showed.

Overall, in December 2021, 12 companies successfully raised more than Rs 16,700 crore from investors. The total amount raised by public issuances during the year was above Rs 1.2 lakh crore. The ongoing year will continue to witness strong interest from domestic investors, and IPOs will continue to attract positive flows, said analysts. However, expensively valued offers are not likely to find too many takers after a couple of disappointing listings.

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