In which Indian IPOs did mutual fund houses invest the most in August 2024?

The IPO market is witnessing an influx of capital flow from different types of investors, and mutual fund houses (MF) are one of the major players among all. In August 2024, 10 companies raised capital over ₹ 17000 crore via IPOs in which mutual fund houses invested over ₹ 6900 crore. August has been a massive month for IPOs after more than two years, as it was May 2022 when such fundraising was seen. So, which MF invested and in which IPOs, and why, let’s find out.  

List of IPOs that rolled in August 2024

In which IPOs in August did Mutual Funds invest the most?

Out of the 10 companies mentioned above, MF Houses invested significantly in eight of them. Moreover, the total investment of ₹ 6900 crore made by MF in IPOs in August is mainly constituted of 2-3 IPOs which are Brainbees Solution, Ola Electric Mobility, and Premier Energies.

1. Brainbees Solutions: In this IPO, mutual fund houses invested a total of around ₹ 2809 crore for 4.22 crore shares. The most number of shares and highest amount invested in this IPO is by SBI Mutual Fund amongst all MF houses. SBI MF invested close to 60% of the entire amount invested in this IPO by MFs which is around ₹ 1880 crore. The next top buyer was Kotak Mahindra Mutual Fund which invested ₹ 299 crore and then there was ICICI Prudential Mutual Fund which put in ₹ 232 crore.

2. Ola Electric Mobility: The next big IPO bet by MF houses in August was this EV company where MFs invested around ₹ 2703 crore against which they bought 23.32 crore shares. In this IPO, the main MF buyer was Mirae Asset Management Mutual Fund which invested ₹ 849 crore, followed by SBI Mutual Fund which invested around ₹ 497 crore, and then HDFC Mutual Fund invested ₹ 480 crore as the third top buyer.

3. Other IPOs: This IPO comes in the third position as per investment by MFs. Total investment by MF in this IPO stood at ₹ 622 crore for which they bought 1.38 crore shares. Apart from these, in Ceigall India IPO, MF houses invested around ₹ 278 crores, followed by Unicommerce eSolutions where ₹ 196 crore was invested by MFs, and then in Interarch Building Products in which ₹ 117 crore was invested by MF, so on, and so forth.

Why do Mutual Funds invest in IPOs?

In the current market scenario, the massive investments by MFs into IPOs are primarily due to - 

• The continuous inflow of funds via SIPs-  In recent years, the investments in mutual funds, especially through regular SIPs have gone up drastically which left the mutual fund houses with limited options to invest
• Growth of IPOs in India- With robust IPO market growth in India, MFs are now channeling their accumulated funds into the primary market.
• Returns in IPOs- IPOs have the potential for generative alpha return for the investors, which is another prime reason for the MFs to choose the IPOs for the underlying assets.
• Listing Gains of IPOs- In addition to the above reasons, the listing gains, which are eye-catching for most IPOs these days also attract MFs, like other investors.

Mutual fund houses mostly invest in IPOs through the anchor investment route, which assures allotment and helps in leveraging market opportunities in the short term. However, mutual fund houses are mostly investing intending to create value for the investors in the long-term and not just driven by short-term gains. This is another reason why MFs are mostly investing in the mainboard IPOs, which have thorough governance and better quality.

Conclusion

With the IPOs coming in regularly, and investors gaining confidence in the primary market, the investment by MFs in IPOs is here to continue. If the IPOs continue to perform well as they are doing currently, the investment may increase with time as investments in mutual funds are increasing as well.