Keeping up with the buoyant primary markets, Edelweiss Mutual Fund will launch an IPO focussed equity fund called Edelweiss Maiden Opportunities Fund – Series 1 that will invest in companies that are newly listed or companies that are looking to go for IPO.
The fund will open for subscription on February 2 and close on February 16.
In a presentation shared with Cafemutual, the fund house said that the fund would focus on 20-30 ideas from newly listed and upcoming IPOs and aims for systematic profit booking through dividend payouts.
Sharing the rationale for the launch of the fund, Radhika Gupta, CEO, Edelweiss Mutual Fund, said that the fund aims to ride the India’s growth story. “There are emerging sectors which offer unique investment opportunities to play out India’s growth story. Also, retail investors have not been able to fully participate in the IPO market.”
Speaking about the scheme, she further said, “The fund will exit the stock after thorough research to optimise post-listing returns. Typically, investors exit on the listing day thereby missing the earnings potential of these companies.”
The fund house believes there are strong tailwinds propelling the IPO markets. Some of these include strong GDP growth, exit by private equity players and PSU disinvestment. The fund house thinks that the robust IPO activity will continue. “With a large number of private equity and venture capitalist funds still waiting to exit, the IPO market is expected to remain buoyant,” the fund house said.
Another feature of the scheme is its close-ended structure. The scheme has a tenure of three years.
Radhika said that the close-ended structure is well suited for a niche fund. “There are mainly three reasons for it. First, we understand that there may be liquidity concerns of the underlying stocks. Second, the opportunities are limited. Currently, we have opportunities, but we are not sure whether such opportunities continue to exist. Third, with the help of a close-ended structure, we can protect the downside by using hedging strategies,” she added.
Nifty 500 Total Return Index will be the benchmark of the scheme. Bhavesh Jain and Bharat Lahoti will manage the schemes.
