Mutual funds go bargain hunting in May, buy Rs 29,000 crore of shares from exiting promoters, FIIs

One of the most significant transactions involved ITC, where MFs collectively acquired shares worth Rs 7,880 crore, after British American Tobacco – a promoter entity - sold stake valued at over Rs 11,500 crore. Currently, 41 fund houses hold positions in ITC, and following the transaction, 29 of them increased their stakes. SBI MF led the buying with an investment of over Rs 2,480 crore, followed by ICICI Prudential MF and Mirae Asset MF, which purchased shares worth Rs 1,410 crore and Rs 1,224 crore, respectively. Other major buyers included Nippon India MF (Rs 1,132 crore) and Quant MF (Rs 783 crore).

In another marquee deal, Rakesh Gangwal, promoter of InterGlobe Aviation (IndiGo), offloaded a stake worth Rs 11,500 crore, with mutual funds buying over Rs 4,900 crore worth of shares in the transaction. Of the 42 mutual funds holding positions in IndiGo, 24 increased their stakes. ICICI Prudential MF emerged as the largest buyer, investing over Rs 2,300 crore, followed by Invesco MF and Kotak MF, which purchased shares worth Rs 693 crore and Rs 427 crore, respectively.

Singapore Telecommunications (Singtel) pared its stake in Bharti Airtel through a block deal valued at Rs 8,500 crore in May. MFs remained active here as well, investing Rs 5,345 crore. Currently, 45 MFs hold Bharti Airtel in their portfolios, with 22 of them increasing their exposure post-transaction. Parag Parikh MF led the buying with an investment of Rs 2,139 crore, followed by ICICI Prudential MF at Rs 1,682 crore. Kotak MF and HDFC MF also participated with investments of Rs 894 crore and Rs 583 crore, respectively.

Jayant Mundhra, an independent research analyst said Indian mutual funds have been sitting on sizable cash reserves - sometimes as high as 30 percent of fund size - owing to the premium at which Indian equities trade compared to other emerging markets. “Any opportunity to deploy money into quality opportunities makes for a compelling case,” he said, adding that market’s ability to absorb large exits reflects its maturity and depth.

Beyond the marquee deals, several other significant block transactions took place in May. In PNB Housing Finance, Carlyle-backed Quality Investment Holdings PCC exited its stake through a Rs 3,460 crore deal, with MFs acquiring Rs 1,350 crore worth of shares. In One97 Communications (Paytm), Antfin Netherlands Holding, a subsidiary of Alibaba Group, sold its holding via a Rs 2,100 crore deal, where MFs picked up shares worth Rs 1,190 crore.

Other notable transactions included KPR Mills (Rs 1,230 crore), Sagility India (Rs 2,670 crore), KFin Technologies (Rs 1,790 crore), PG Electroplast (Rs 1,133 crore), and JSW Infrastructure (Rs 1,200 crore). MFs invested Rs 760 crore, Rs 734 crore, Rs 570 crore, Rs 460 crore, and Rs 75 crore in these deals, respectively.

Read More: Promoters rush for the exit as stocks soar but discounts raise alarm

Siddharth Bhamre, Head of Research at Asit C Mehta Investment said that with strong inflows into mutual funds and a regulatory cap on idle cash holdings (typically 5–10 percent), fund managers are often compelled to invest.

“It’s not about investing at any valuation, but when good opportunities arise at fair valuations — especially during large block deals —MFs are naturally inclined to participate,” he explained. He added that while foreign investors have more flexibility across global markets, MFs often face stronger pressure to deploy capital efficiently.

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