Record Anchor Investments in IPOs by MFs and FIIs in 2024

Record Anchor Investments in IPOs by MFs and FIIs in 2024

In a landmark year for the Indian stock market, anchor investments in initial public offerings (IPOs) by foreign institutional investors (FIIs) and mutual funds (MFs) reached a record-breaking Rs 45,650 crore in 2024. This achievement underscores the increasing confidence of institutional investors in India’s growing market. The previous high was Rs 42,558 crore in 2021.

Focus on FIIs: Unprecedented Growth in Investments

Foreign institutional investors took the lead with contributions of Rs 25,300 crore to IPO anchor books. This marks their highest level since 2021 when FIIs had invested over Rs 29,000 crore. Their substantial participation reflects a renewed interest in India’s equity market, driven by robust economic growth and strong corporate earnings.

Mutual Funds Achieve Historic Milestone

Mutual funds also made significant strides, investing Rs 20,351 crore in IPOs during the year. This figure not only surpasses the Rs 13,528 crore recorded in 2021 but also represents an over threefold increase compared to last year. However, for the first time in two years, mutual fund investments in IPOs lagged behind FIIs, amounting to 20% less than the foreign contributions.

In previous years, such as 2022 and 2023, mutual funds had outpaced FIIs, highlighting a shift in dynamics for 2024.

Noteworthy IPOs Attracting Anchor Investments

Several high-profile IPOs drew substantial anchor investments this year:

Hyundai Motors India: FIIs led the way with Rs 4,545 crore, exceeding MF investments by 50%.
Swiggy: FIIs invested Rs 2,100 crore, slightly outpacing mutual funds.
NTPC Green Energy: Mutual funds contributed Rs 1,570 crore, surpassing the Rs 1,493 crore invested by FIIs.
Ola Electric Mobility: Both FIIs and MFs showed strong interest, reflecting confidence in India’s EV sector.

Top Institutional Investors of 2024

Leading FIIs:

Government Pension Fund Global: Rs 1,273 crore
Government of Singapore: Rs 1,262 crore
New World Fund Inc: Rs 1,256 crore
Nomura Funds Ireland PLC: Rs 783 crore
Abu Dhabi Investment Authority: Rs 730 crore

Leading Mutual Funds:

ICICI Prudential MF: Rs 2,261 crore
Nippon India MF: Rs 2,064 crore
HDFC MF: Rs 2,025 crore
SBI MF: Rs 1,870 crore
Kotak Mahindra MF: Rs 1,485 crore

A Record-Breaking Year for IPOs

Indian companies raised a total of Rs 1.5 lakh crore through 75 mainboard IPOs in 2024, setting a new benchmark. This figure is a significant increase compared to Rs 49,435 crore from 57 IPOs in 2023 and Rs 59,301 crore from 40 IPOs in 2022.

Steady Growth in Domestic Institutional Participation

Domestic institutional investors (DIIs), particularly mutual funds, have consistently increased their market presence over the past four years. This trend has been fueled by steady inflows into equity schemes, which have remained positive for 45 consecutive months. Since January 2024, inflows into open-ended equity funds have reached Rs 3.53 lakh crore, compared to Rs 1.61 lakh crore in both 2023 and 2022.

The Role of Anchor Investors in the IPO Market

The concept of anchor investors was introduced by the Securities and Exchange Board of India (SEBI) in 2009. Designed to stabilize the IPO market, anchor investors lend credibility to public issues, boost demand, and foster trust among retail investors. Their early and substantial investments set the stage for successful IPO launches.

Conclusion

The unprecedented level of anchor investments in IPOs by FIIs and MFs in 2024 highlights a pivotal year for the Indian stock market. With robust contributions from both domestic and foreign players, the market has demonstrated its resilience and potential for growth. The participation of leading global and domestic institutional investors underscores the confidence in India’s economic and corporate outlook.