Fundrais­ing via eq­uity NFOs high­est since ’08

Business Standard - - YOUR MONEY - CHANDAN KISHORE KANT

It is not only the ini­tial pub­lic of­fer­ing (IPO) mar­ket that’s bustling. New fund of­fer­ings (NFOs) launched by mu­tual fund houses have also seen a big boost this year.

A to­tal of 37 eq­uity NFOs col­lected ~11,961 crore in the first eight months of 2017. This is the high­est mo­bil­i­sa­tion through new of­fers since 2008. Launches, at eight, had hit bot­tom in 2012. With re­vival in the sec­ondary mar­ket and con­sis­tent in­flow into MF schemes since early 2014, the ac­tiv­ity here has seen a grad­ual pick-up.

This has come at a time when mar­ket par­tic­i­pants had thought NFOs would be out of vogue and they'd have to fo­cus on grow­ing the ex­ist­ing of­fer­ings. The av­er­age NFO size this year has seen a con­sid­er­able in­crease to ~323 crore, from ~115 crore last year. In­flows through the route was 15 per cent of net eq­uity in­flow into the MF sec­tor in 2017; for Jan­uary-Au­gust, eq­uity schemes had to­tal in­flow of ~81,000 crore.

Su­nil Subra­ma­niam, chief ex­ec­u­tive at Sun­daram Mu­tual Fund, says: “There are fund houses which do not have sev­eral prod­ucts; they're com­ing up with prod­ucts and launch­ing them. How­ever, I do not think it is right to say NFOs are back.” Of­fi­cials in the seg­ment do not want to be seen in sup­port of new launches, given mar­ket reg­u­la­tor Sebi’s push to merge schemes.

In 2014, fund houses of­fered as many as 75 eq­uity NFOs to in­vestors. How­ever, de­spite such a large num­ber of new launches, only ~12,219 crore was col­lected by the in­dus­try.

Swarup Mo­hanty, chief ex­ec­u­tive at Mi­rae As­set MF, says if the mar­ket re­mains strong, an in­creas­ing trend of new of­fers is pos­si­ble. “Though NFOs are the riski­est of prod­ucts, there is still a sec­tion of in­vestors who like the ~10 unit value,” he adds.

Kaus­tubh Be­la­purkar, di­rec­tor of fund re­search at Morn­ingstar In­dia, says new launches do not seem to be dry­ing. “Apart from ful­fill­ing of prod­uct bas­kets by fund houses, strong mar­ket sen­ti­ment might also be pro­pel­ling fund play­ers to come up with new funds, to garner a healthy sum,” he says.

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