Mutual fund investments in initial public offerings (IPOs) have seen steady growth, driven by consistent inflows into equity schemes via systematic investment plans and lump-sum investments. According to data from PRIME Database, mutual funds’ investments in IPOs through qualified institutional buyers (QIBs) increased by 13 percent in the September quarter, reaching ₹6,420 crore, compared to ₹5,689 crore in the June quarter. This rise is attributed to a significant increase in large issuances in recent months.
Mutual funds have played a pivotal role as anchor investors in IPOs, with their participation rising by 32 percent to ₹5,129 crore in the latest quarter, up from ₹3,871 crore in the June quarter. Conversely, non-anchor QIB participation has declined by 29 percent, decreasing to ₹1,290 crore from ₹1,817 crore in the previous quarter, while the number of fresh issuances surged to 46 from just 15 in the prior quarter.
Fund houses have increasingly participated as anchor investors in recent IPOs, providing essential confidence to retail investors. The investment through QIB-anchor is subject to a lock-in period of 30 days for 50 percent of the shares and 90 days for the remaining shares from the date of allotment. In contrast, non-anchor QIBs do not face mandatory lock-in periods in their IPO participation.
Prithvi Haldea, Chairman of PRIME Database, stated that the trend of mutual funds actively engaging in IPOs is expected to persist in the near future due to a robust pipeline of upcoming issues and consistent inflows into mutual funds. He noted that with the capacity to invest substantial amounts, mutual funds also play a significant role in setting IPO prices, leveraging their bargaining power during roadshows.
Despite market volatility and benchmark indices yielding modest returns this year, investors are maintaining confidence in mutual funds to capitalize on the long-term growth potential of the Indian economy, Haldea added. Sunny Agrawal, Head of Fundamental Research at SBI Securities, remarked that opportunities in the secondary market for decent short- to medium-term returns are becoming limited. As a result, many investors and institutions are directing funds toward businesses in the primary market that exhibit promising growth prospects and strong fundamentals.
Agrawal also cautioned that the recent lukewarm listings of many IPOs indicate that these offerings are often priced at fair or even high valuations, leaving little value for incoming investors. Nonetheless, he noted that a few niche businesses with strong growth potential, supported by favorable industry trends, continue to attract institutional interest despite coming to market at these valuations.
Published on October 11, 2025.
