MFs to keep powder dry as LIC IPO likely to hit the market next month

As of January 31, top five fund houses held Rs 23,245 crore in cash, or 4% of their total equity assets

Mutual funds (MFs) are keeping their powder dry to invest in Life Insurance Corporation of India’s (LIC's) initial public offering (IPO) that is expected to hit the market next month.

Industry executives believe that a few large-cap and flexi-cap schemes may choose to hold back the fresh flows they get in the days leading up to the IPO. These flows will then be funnelled into the offering. A few funds may also choose to liquidate some of their existing holdings, especially in other insurance companies, and plough them back into LIC.

As of January 31, the top five fund houses held Rs