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Funds' Participation in IPOs

The first quarter of 2004 was a hectic one for the Indian primary market. In all, 11 companies came up with their public issue aggregating nearly Rs 16,000 crore. MF got maximum shares in CMC issue and the least in ONGC

The first quarter of 2004 was a hectic one for the Indian primary market. In all, eleven companies came up with their public issue aggregating nearly Rs 16,000 crore. ONGC was the biggest of all (Rs 10,694 crore) and Power Trading Corporation (PTC) the lowest (Rs 93.6 crore). Mutual funds participated in each one of them but the magnitude of fund's participation differed for each offering.

Though the maximum number of funds participated in the public issue of ONGC (126 in all), but on an aggregate, mutual funds just got 1.58 per cent of the total issue size of 1,425.93 crore shares. The figures are arrived on the assumption that whatever shares funds bought in March 2004, were through the initial offer and not through the secondary market.

Surprisingly, mutual funds got maximum shares in the public issue of CMC (20.7 per cent of the total issue size spread over 36 funds). Though 7 funds already held this stock, they too have increased their exposure in the company. Mutual funds also received good number of shares in Dredging Corporation's offering -- 14.5 per cent of the total issue size. In all, 49 funds took part in the company's IPO.

These were followed by PTC and IPCL, in which funds received over 8.5 per cent of the total shares issued by them in the public offering. While 76 funds participated in the IPO of PTC, the number of funds holding IPCL rose to 98 in March from 61 funds in February 2004.

Bank of Maharashtra was the only issue, in which just one fund took part – Reliance Banking fund. The fund, however, sold the stock in mid-April 2004. The next least sought after IPOs were that of Petronet LNG and IBP. Only 9 funds participated in Petronet LNG. On the other hand, the number of funds holding IBP gone up to 13 in March 2004 from 4 funds in February 2004. The other public issues during the period were that of GAIL and Biocon. Both got good response from mutual funds -- over 100 funds participated in each one's public offering.