Business · Markets · 2 hrs ago
Indian mutual funds focus on larger, high-conviction market deals
Indian mutual funds are putting more money into large share offerings, including initial public offerings and other transactions.
The shift comes as contributions to systematic investment plans, or SIPs, reached a record ₹32,490 crore in September, according to industry data.
SIPs are regular investments, and their growth has increased the money funds can invest.
Fund managers are focusing on deals in areas such as financial services, manufacturing and new-age IT.
In crowded offerings, funds may bid for far more shares than they ultimately receive because they compete with other investors.
Recent examples include the government’s sale of shares in Life Insurance Corporation and offerings by Piramal Finance and APAR Industries.
The trend reflects a bigger role for Indian institutional investors, while managers seek deals large enough to take substantial positions without giving up valuation discipline.
Record SIP inflows are increasing the money available for mutual funds to invest.
Fund managers are focusing on fewer, larger IPOs and other equity deals where they have strong conviction.
They are deploying capital in sectors including financial services, manufacturing and new-age IT.
Large bids can exceed the size of a deal, but funds may receive only part of the shares they seek.
Domestic mutual funds accounted for about 76.5% of the government’s August offer for sale of Life Insurance Corp. shares.
- Who
- Indian mutual funds and their fund managers.
- What
- Mutual funds are concentrating investments on larger, high-conviction IPOs and other primary-market deals.
- When
- SIP contributions reached a record in September; examples of large bids cited in the article took place in August.
- Where
- India’s primary market.
- Why
- Rising SIP inflows have expanded funds’ investible pools, while fund managers seek deals that can absorb substantial capital without compromising liquidity or valuation discipline.
This story does not have two clearly opposing sides.
SIP inflows reached ₹32,297 crore, and mutual funds placed large bids in several transactions described in the article.
The government’s offer for sale of up to 6.5% of its stake in LIC was completed at a size of ₹31,552 crore.
SIP contributions reached a record ₹32,490 crore.
- September SIP contributions
- ₹32,490 crore
- August LIC offer-for-sale size
- ₹31,552 crore
- LIC MF allocation
- About 76.5% of the total offer-for-sale allocation
- Piramal Finance transaction
- ₹2,100 crore; bids reached up to ₹20,000 crore
- APAR Industries QIP
- ₹2,500 crore; three funds reportedly bid around ₹2,000 crore each
What people are saying
All the larger funds have been aggressive and are deploying money in core sectors such as financial services, manufacturing and new-age IT.
Mutual fund participation in the primary market has increased materially over the last 6–12 months, both in absolute quantum and in the size of individual commitments.
Sources
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