Tata MF IPO rakes in Rs 700 cr

Offer received more than 100,000 applications.

The Tata mutual fund has garnered more than Rs 700 crore in its latest initial public offering (IPO) for the Tata Infrastructure Fund.

The offer, which closed on December 22, 2004, was one of the largest open-ended equity IPOs in the last 10 years, mutual fund distributors said.

The Tata Infrastructure Fund received more than 100,000 applications, testimony to the fact that the small investor is taking to equity and increasingly using the mutual fund route.

Ved Prakash Chaturvedi, Tata Mutual Fund CEO, said: "Investors have appreciated performance and funds that have done well have received a good response from investors. Our latest IPO has received a huge response from a wider audience, in almost 100 cities and towns."

Rajagopalan, managing director of BlueChip Corporate Investments, the fund distribution house, said: "The rising market has attracted many small investors to equity mutual funds, especially from the smaller cities and towns. Retail participation has definitely increased but the bulk is still made up of high net worth investors and corporates."

The year 2004 was a good year for equity funds. More than 30 mutual fund houses floated IPOs for equity plans, collecting more than Rs 4,000 crore. Despite this huge new inflow, mutual funds were net sellers in the equity market in 2004.

Market men say that this was the outcome of redemption pressure from older investors and the funds themselves churning their portfolios and that in the larger picture this is a healthy sign.

Besides, some older investors were also re-investing their redeemed money in mutual fund IPOs, players added.

Ashutosh Bishnoi, chief marketing officer at UTI mutual fund, said: "The year 2004 was good for the mutual fund industry, especially equity funds. This helped mutual funds add not only assets under management (AUM) but also investors."

He added that investors must look to book profits and some redemptions for profit booking is good for the industry and augurs well for long term growth.

Some of the biggest equity IPOs in 2004 as far as mutual funds go are, apart from the Tata Infrastructure Fund, the Tata Dividend Yield Fund (Rs 414 crore), the Principal Dividend Yield Fund (Rs 350 crore), the HDFC Core & Satellite Fund (Rs 400 crore), the ABN Amro Equity Fund (Rs 350 crore), the Reliance Pharma Fund (Rs 147 crore) and the Reliance Diversified Power Sector Fund (Rs 415 crore).

Six thematic funds from the UTI mutual fund stable collectively garnered Rs 310 crore and Kotak Global India raised Rs 344 crore in 2004, according to data from MutualfundsIndia.com.