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Investors use InvITs to exit mutual funds without cost, Hudco grey market premium at 30%

May 8th, 2017 2:27 pm | By | Category: LATEST NEWS

Dr. M Ravikant, IAS CMD (HUDCO)

Dr. M Ravikant, IAS

Several mutual fund (MF) houses had to obtain a one-time shareholder consent to invest in Infrastructure Investment Trusts (InvITs). The approval had to be taken at the scheme level. According to the Securities Exchange Board of India’s (Sebi’s) guidelines, fund houses had to waive off exit load on unit holders who didn’t wish to continue with the scheme. According to market players, several savvy investors used this as an opportunity to exit, saving around 100 basis points in cost. Shares of state-owned Hudco are changing hands at a 30 per cent premium in the grey market ahead of its ~1,200-crore initial public offering (IPO). Market players say operators are offering up to ~80 per share for the financing company. The price band for the issue is fixed at ~56-60 a share. The government is offering an additional discount of ~2 to retail investors. Going by the grey market signals, the first public sector IPO in the past five years is likely to be a big hit.

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