Mutual Funds Triples Anchor Investments in IPOs to Over ₹21,500 Crore

Despite a slowdown in IPO activity due to bearish market sentiments, mutual funds have significantly increased their participation as anchor investors in primary market deals, reflecting growing institutional confidence and strategic deployment of equity inflows.

Over ₹21,500 Crore in IPO

In calendar year 2024, mutual funds' anchor investments in IPOs surged over three times to ₹21,583 crore across 34 offerings, compared with ₹6,651 crore in 29 IPOs in 2023, based on data from Equirus Capital. This marks a significant increase from 2022 as well, when the investments stood at ₹9,028 crore across 24 issues.

Robust Performance in H1 2024 Despite Fewer Offerings

The positive momentum continued in the first half of 2024, even though the number of IPOs witnessed a decline due to unfavourable market conditions. According to Geojit Insights reports, mutual fund investments reached ₹16,368 crore across 16 IPOs in H1 2024 alone, highlighting the strength of institutional demand even in a downbeat market.

Key IPOs Attracting Major MF Participation

One of the standout listings was Hexaware Technologies, where mutual funds infused a massive ₹7,505 crore, showcasing their appetite for select high-quality offerings. In comparison, investments in other IPOs remained below ₹2,000 crore, underlining a selective and research-driven approach by fund managers.

Strategic Anchor Investment Benefits for MFs

From a mutual fund’s standpoint, participating as an anchor investor guarantees a sizable initial allocation that aligns with the extensive research and evaluation efforts undertaken. This is especially relevant when building a diversified equity portfolio with long investment horizons.

Things to know: Anchor investors in Indian IPOs are subject to a regulatory lock-in of 120 days post-allotment. Under this, 50% of the shares are locked for 90 days, and the remainder for 30 days thereafter. This ensures short-term stability in a newly listed stock’s price.

Read More: When Can Investors Expect Flipkart IPO?

Conclusion

Mutual funds have become increasingly important in the IPO ecosystem, with their anchor investments growing nearly threefold year on year. Despite fewer IPOs in 2024, institutional deployments like those into Hexaware Technologies reflect an ongoing focus on high-quality deals backed by extensive research. Their increasing role creates a firm foundation that boosts investor confidence even under volatile market conditions.

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

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