Sunday, Oct 02, 2022

Know How Much Exposure Your Mutual Fund Has To Paytm IPO

Recent research by the online business publication, Moneycontrol revealed that at an issue price of Rs 2,150 per share, mutual funds invested a total of Rs 1,050 crore.

The Paytm IPO that tanked 27 per cent on its debut has received investments worth Rs 1050 crore. According to a report by Moneycontrol research, a total of 18 schemes from four mutual funds participated in the IPO of the fintech platform that, was touted as the country's biggest IPO.

The research by online business publication revealed that 18 schemes from four mutual funds invested a total of Rs 1,050 crore in fintech platform Paytm's IPO. The offering had an issue size worth Rs 18,300 crore. Out of which, Rs 8.325 crore was raised from anchor investors. At an issue price of Rs 2,150 per share, mutual funds invested Rs 1,050 crore, informs Moneycontrol.

Among the more prominent names, including those Aditya Birla Capital, HDFC and Mirae Asset combined invested a total of Rs 771.4 crore under varied schemes in the Paytm IPO. This accounted for a total of 9.3 per cent of the anchor book.

Mirae Asset Management invested Rs 185.1 crore for a total share of 2.2 per cent in the anchor book. Aditya Birla Sun Life Frontline Equity and Aditya Birla Sun Life Flexi Cap invested Rs 142.6 crore and Rs 139.8 crore for a share of 1.7 per cent each in the anchor book.

Further, Mirae Asset via two other schemes, namely, Mirae Asset Focussed and Mirae Asset Emerging Bluechip invested Rs 90 crore and Rs 75 crore in the IPO respectively.

Aditya Birla Capital too via another scheme, namely, Aditya Birla Sun Life Equity Hybrid '95 invested another Rs 73.6 crore into the IPO.

Among other prominent names is HDFC Mid Cap which invested Rs 65.3 crore for a 0.8 per cent share in the anchor book.

Supposed to be the country's biggest IPO with a size worth Rs 18,300 crore, Paytm debuted on the bourses at a 9 per cent discount. It closed at a price of Rs 1,560, 27.40 per cent below the offer price. Out of the total issue, the fresh issue was worth Rs 8,300 crore and the offer for sale was for Rs 10,000 crore.

Nevertheless, the company managed to breach a total market capitalisation of Rs 1.01 lakh crore.

Mutual funds are believed to be very conservative. They are unwilling to invest in companies without an efficient track record and operational capability. In the case of IPOs, which is completely new territory, they exercise caution and check a company's sales and earnings before any investment.

Despite talks about colossal valuations of the new generation tech-based companies, mutual funds do not shy away from making an investment in them.

Moneycontrol informs that as many as 19 mutual funds invested Rs 1,399 crore as anchor investors in the online food aggregator Zomato's IPO. Beauty products e-retailer Nykaa's IPO got Rs 798 crore from mutual funds at Rs 1,125 per share.

“...Though equity mutual funds are meant for long term investing many mutual fund houses subscribe to such IPOs with a view to make some quick trading profits by selling them after 30 days of lock-in ends. It goes against the spirit of investing," chief ideator of ithought advisory, Shyam Sekhar told the online publication.