Foreign portfolio investors (FPIs) have invested ₹8,567 crore in initial public offerings (IPOs) this year, compared with ₹6,381 crore put in by mutual funds, ₹1,947 crore by insurance companies, and ₹795 crore by alternative investment funds (AIFs).
Mutual funds, however, have invested more than FPIs as anchor investors for the second year in a row. ICICI Prudential MF, Nippon India MF, and HDFC MF are the top MF anchor investors, having put in over ₹1,700 crore this year. Goldman Sachs, Ashoka, and the Government of Singapore are the top three anchor investors among FPIs, with investments of over ₹300 crore each.
Anchor investors
Anchor investors are typically institutional investors that subscribe to an issue a day before its public opening. They pay an upfront amount and hold shares for at least a month to boost investor confidence.
Last year, mutual funds invested ₹13,300 crore in IPOs, which was a tad higher than FPIs. Their anchor investment of ₹9,028 crore was also much higher than that of FPIs, which invested ₹7,105 crore.
The bulk of the FPI and MF investment in IPOs in CY23 was in Mankind Pharma (₹1,921 crore) and JSW Infrastructure (₹1,548 crore). Other IPOs that saw robust interest from these categories of investors at the IPO stage include Honasa Consumer (₹1,064 crore), Samhi Hotels (₹908 crore), and Tata Technologies (₹904 crore).
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The market has seen a flurry of small and mid-sized IPOs hit the market this year, with 46 companies raising over ₹41,000 crore through main board IPOs. This is expected to continue till a few weeks prior to the general elections next year, experts said.
“Given the stable macros and growth visibility, FPIs have invested selectively in companies with good business models and fundamentals,” said Kranthi Bathini, Director, Equity Strategy at WealthMills Securities.
The general buoyancy in the market, coupled with the large domestic pool of money, has helped the offerings sail through comfortably. Valuations have been attractive as promoters have been pragmatic and left money on the table for investors.