Mutual funds make most out of the IPO boom

Like retail investors, even mutual funds have made most of the IPO flood during the last year. According to a report by Ventura Securities, 36 companies raised Rs 43,000 crore through IPOs from June 1 2020 to June 31 2021. Mutual funds have participated in 35 out of these IPOs. Of the total IPOs issued in the last year, 72 per cent were listed at a premium while 28 per cent opened at a discount.Many mutual fund IPOs are booking gains after the mandatory lock-in period of one month ends. A total of 1051 schemes have applied for these IPOs, of which only 582 schemes are currently holding on to those IPOs’ shares. Nippon was the most aggressive in IPO investment among the top 10 AMC. It applied for 23 IPO out of the 36 IPO released in the last 1 year. ITI, Quantum, Shriram and Taurus MF did not apply for any IPO in the last year. One of the most talked-about IPOs in the year, Zomato, saw 69.48 crore shares trade on day one at NSE accounting for a total transaction of Rs 8625 crore. Such massive trading volumes in shares which are just listed is possible as institutional investors like mutual funds participate in it. During this IPO season, Mutual Funds are taking advantage of the short term windfall gains that IPOs are currently delivering, says a note by Ventura Securities.

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