VR Logo

IPO Mania Again?

Not really, fund managers are just being extremely cautious

This story appeared in the November 15 - December 14, 2009 Edition of Mutual Fund Insight.

Initial Public Offerings (IPO) may be in the limelight, but all fund managers are not buying. This year (2009), 16 IPOs hit the market with mutual funds investing in only seven.

The most popular were National Hydroelectric Power Corporation (NHPC) and Oil India Ltd (OIL). OIL, whose IPO came out in September 2009, had 102 schemes that bought into it with a total investment of Rs 513.46 crore (45 lakh shares). NHPC, whose IPO came out in August 2009, had 100 schemes with an invested amount of Rs 264.02 crore (723 lakh shares).

The largest investors in OIL were HDFC Top 200 (Rs 67.87 crore), HDFC Equity (Rs 56.46 crore) and Reliance Tax Saver (Rs 49.22 crore). Magnum Taxgain (Rs 24.54) and ICICI Prudential Infrastructure (Rs 22.93 crore) preferred NHPC.

By October 2009, the number of schemes invested in NHPC dropped to 63 but the total number of shares held with funds increased to 1,275.70 lakh. Also, the total investment went up to Rs 389.09 crore, despite the shares price of the NHPC dropping by around 17 per cent since its listing.

The OIL stock saw 31 funds exit by October, dropping the fund count to 71, while the actual number of shares increased to 51 lakh. The stock price of the company dropped around 3 per cent from its listing date.

Mahindra Holidays & Resorts India came out with its IPO in June 2009. By July, 20 schemes (Rs 73.11 crore) were holding the stock. The highest investments, of around Rs 10 crore each, were made by DSPBR Equity and DSPBR Small and Mid Cap Fund.

Adani Power attracted 21 funds initially (now just 3). The stock lost around 2 per cent of its value since its listing in August 2009.

Five funds (now just 2) invested in Pipavav Shipyard which came out with its IPO in September. Unit Linked Insurance Plan’71 was holding shares of the company even prior to its IPO.

IDFC Premier Equity is the only fund to have invested in Globus Spirits and Raj Oil Mills.All data and stock prices are as on October 31, 2009.