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DBS Chola to put some funds in smaller IPOs
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DBS
Chola MF,.which has launched its three-year close-ended small cap fund
recently, also intends to invest a part of the funds mobilised into
small and midsized initial public offers (IPOs).
DBS
Chola Small Cap.Fund would be benchmarked against the BSE Small Cap
Index. Unlike its bigger
and more well known index peer SENSEX 30, the BSE Small Cap Index includes
stocks in the media and entertainment, hardware, mining, courier, sanitaryware
and transportation sectors.
"Besides
investing in small cap stocks, we would also look into high-quality
small-sized IPOs.
In
recent times one has seen a lot of IPOs aimed at raising anywhere between
Rs 100 crore to Rs 500 crore," said DBS Chola MF chief marketing
offi-
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cer
Vineet Potnis. He said that while the large cap stocks
were heavily owned by FIIs and domestic institutional investors,
the ownership in small caps left much to be desired.
Institutional
holding in small cap stocks was as low as 11.28% in FY'04 rising to
a high 1 3.81 % in FY'06 and 1 5.64% in FY'07. By September 2007, this
stood at 16.84%.
The
new fund offer (NFO) for the small cap fund would close on December
20, 2007 and would help to fill gap in the existing equity basket of
offering, he added.
Curiously,
against the 484 stocks classified as "small cap" slocks, brokerage-related
coverage extends only for 268 stocks that are regularly researched.
It is believed that DBS Chola MF may also advise on an India-centric
off-shore fund. "DBS is a huge brand name in Asian markets. An
offshore fund would be something of a natural fit though nothing is
on the drawing board at this point of time," Mr Potnis added.
DBS
Chola MF has over Rs 5,000 crore of assets under man-agement(AUM).
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