August FPI inflow hits five-year high

Bank QIPs help swell inflow to

Private banks' huge fund raising through qualified institutional placement (QIP) bloated foreign fund flows to the equity market in August and balanced out outflows from profit taking by domestic mutual funds.

Total foreign portfolio investments stood at Rs

46,602 crore in August so far. This is the highest foreign inflows in a month this year and in the last five years.

It should also be kept in mind that such a large inflow is coming in a world flooded with abundant liquidity and after huge withdrawal by the foreign portfolio investors (FPIs) earlier this year worth Rs

61,973 crore in March and Rs 6,884 crore in April.

In the first half of August, ICICI Bank raised Rs 15,000 crore through QIP. Also, Axis Bank and home loan financier HDFC raised Rs 10,000 crore each through QIPs where both FPIs and domestic institutions were bidders.

FPIs cornered a lion's share of ICICI Bank’s QIP; the Government of Singapore was allotted over 46.44 lakh shares comprising 11.08 per cent of the total equity shares issued in the QIP issue. Morgan Stanley Investment Management’s Global Opportunity Fund was allotted over 30.63 lakh shares (7.31 per cent of the issue) and Societe Generale got over 23.24 lakh shares, or 5.55 per cent of the issue.

Axis Bank, after close of the QIP, said,”Despite a challenging macro-economic environment, the placement has witnessed strong reception from the global and domestic investor community, including several large foreign portfolio investors, domestic mutual funds and insurance companies.”

FPIs shareholding in Axis Bank has gone up from 45.96 per cent as on June 30 to 48.47 per cent as on August 11, as per the updated shareholding data, post-QIP.

In HDFC Ltd’s case, Government of Singapore was allotted over 75.96 lakh shares comprising 13.37 per cent of the total equity shares issued in the QIP while another FPI, Invesco Oppenheimer Developing Market Fund was allotted over 31.40 lakh shares comprising 5.54 per cent of the QIP.

ICICI Bank and HDFC are yet to update their shareholding data postQIP.