Mutual funds amplify role as anchor investors in FY24 IPOs

Domestic mutual funds (MFs) have played a pivotal role in the initial public offerings (IPOs) of fiscal year 2024 (FY24), according to data compiled by PRIME Database. This surge in activity was noted on Wednesday, marking a shift in the investment landscape.

MFs have significantly subscribed to shares on offer in various IPOs, acting as anchor investors and bolstering investor confidence. The increased involvement of MFs is linked to the reduced average size of IPOs this year, which has amplified their significance as anchor investors.

Companies such as Rishabh Instruments, Aeroflex Industries, Netweb Technologies, Yatra Online, and Concord Biotech have seen MFs subscribe to a considerable portion of available shares in their respective IPOs. This has fortified the demand for these companies’ shares and has been a key factor in underpinning investor confidence.

Foreign portfolio investors (FPIs), usually dominant in the anchor category, have been less active due to the smaller IPO sizes. This change in dynamics has allowed Securities and Exchange Board of India (Sebi)-registered entities like MFs to step up their game.

High MF subscriptions were also noted in IPOs from Mankind Pharma, RR Kabel, SAMHI Hotels, TVS Supply Chain, and LIC. The performance of most IPOs in FY24 has been robust, with shares trading above their issue price.

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