Business Bureau :
Pension fund managers (PFMs) will soon be allowed to invest in initial public offerings, and also in a broader list of stocks, a top official from sector regulator PFRDA said on Tuesday. The Pension Regulatory and Development Authority (PFRDA) is aiming to increase the number of subscribers looking to build a retirement corpus by 1 crore in FY22 with the increase in interest during the pandemic, its Chairman Supratim Bandyopadhyay told reporters. Currently, there are restrictions under which PFMs can invest the equity component of a corpus only in scrips traded on the options and futures segment with a market cap of over Rs 5,000 crore. Officials said this restricts the opportunities for fund managers, who have been able to deliver a compounded annual growth rate of 11.31 per cent on equity investments since the beginning of the new pension scheme.
They pointed out Avenue Supermarkets as a case in point, where PFMs were not able to enter due to restrictions. “In two or three days, we will be notifying new rules which take a more liberal view on categories where equity investments can be made,” Bandyopadhyay said.Under the new rules, PFMs will be able to invest in IPOs, follow-on public offers, offer for sale of companies. And, the universe of stocks to choose from will also be broadened to the top-200 scrips traded on NSE and BSE, he said. Bandyopadhyay stressed that he is personally for more equity investments because of the returns that it has delivered.