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TM Lures Open-end Funds

Tech Mahindra was never a funds' favourite

Whether Tech Mahindra will ultimately be able to turnaround Satyam Computer or not, it has surely got itself noticed as a mover and shaker in the recent months due to the David and Goliath angle in the story.

Before Satyam, Tech Mahindra was a minnow in its sector and rarely did anybody took a serious note of it. But with the Satyam acquisition and with debt issues of over Rs 875 crore, Tech Mahindra has caught the fancy in a big way of the public in general and the investing community in particular.

The same applies to the mutual fund industry. Total investment of open-end funds in Tech Mahindra for the month of April went up in a big way from just Rs 18.05 crore at the end of March 2009 to Rs 416.18 crore -- that too in mostly by shorter-term debt funds.
This is equivalent to a jump of 2,205 per cent, thanks primarily to the subscription of fund-houses like Reliance, Kotak, DWS and ICICI Prudential to the incumbent’s maiden debt issue. They have together subscribed around Rs 412.56 crore of the issue. Out of this, Rs 231.15 crore alone is invested by Reliance Money Manager Retail.

Though fund managers were never very confident in buying the equity of this company, but when it came up for debt it readily got an audience. This is a normal tendency among investors also, even though they are never sold on the idea, but the moment assured returns are offered they take to the idea. Even though for Tech Mahindra this acquisition is a high risk affair, still the fact that fund houses have subscribed in this manner means a sign of approval and confidence in the abilitry of the small tech firm to make a success of the acquisition.