With an expanding corpus and a limited basket of good scrips, equity funds are on the look out for good primary offers. ``Investments in a Infosys or a Satyam or a NIIT are reaching a point of satiation. Funds need to invest in some new, fundamentally good scrips,'' points out an industry obs-erver.

Book-building for the HCL Technologies issue will be kicked off on November 16 and will remain open till November 24. While the company has indicated a price band of Rs 450-540 for the Rs 4 share, the final price will be decided on November 25. Fund managers point out that in the event of a good primary offer, a portion of the portfolio may have to be liquidated to augment the cash component for making an investment. However, this is not required in case of book-building.

``In a rising market, liquidating stocks in a equity fund for investment in a IPO can be a tricky decision. It may so happen that the stock which you sold has appreciated 100 per cent in that period. Thus, it does not make sense to liquidate stocks and invest in a IPO. In a balanced fund, fund managers can afford to liquidate a portion of their debt portfolio for an IPO. A 50 per cent return on listing is any time better than the 11-12 per cent return on a debt instrument,'' points out a fund manager. ``Equity funds normally stay fully invested in a bull market and hence, do not have a high cash component. Here, only a big inflow of fresh investments can help a fund manager invest in an IPO,'' adds a fund analyst.

In the case of Hughes Software, the five asset management companies of Birla, Kothari, Kotak, JM and GIC managed to corner close to 2.4 lakh shares, which is a little over 6 per cent of the the 39.37 lakh shares being offered during book-building. The allotment to other big bidders like Unit Trust of India, Morgan Stanley and Alliance Capital is not known. According to sources, equity funds had made very high bids in Hughes Software, which was as high as Rs 200 crore in some cases.

``Though it's early days, book building is gaining acceptance and more and more issues are now expected to come through book-building. It suits an increasingly institutionalised market as there is a price discovery rather than the company fixing a premium,'' says an analyst.

``With 90 per cent of the Hughes or HCL Technologies issues coming in the form of book building with a minimum bid for 500 shares in the former, retail investors will slowly lose out in the IPO race. Then, mutual funds will be the only route,'' quips a fund manager.