IPO frenzy: Flush with funds, MFs pump-in ₹6,420 cr in Sept quarter
Mutual funds investment in initial public offerings of corporates have been increasing steadily on the back of consistent inflows in equity schemes through systematic investment plan and lumpsum investments.
MFs investment in IPOs through qualified institutional buyers has jumped 13 per cent in the September quarter to ₹6,420 crore against ₹5,689 crore logged in the June quarter on the back of a sharp increase in large issuances in the recent months, according to the data sourced from PRIME Database.
In fact, MFs have been playing a key role in anchoring IPOs with their participation as anchor investor has been rising 32 per cent to ₹5,129 crore last quarter against ₹3,871 crore in June quarter.
The ex-anchor participation in IPOs of MFs has fallen 29 per cent to ₹1,290 crore against ₹1,817 crore in June quarter. The number of fresh issuances have also jumped to 46 against 15 in the previous quarter.
Fund houses have been participating as anchor investor in most last IPOs giving the much-needed confidence to retail investors.
The investment through QIB-anchor comes with a lock-in period of 30 days for 50 per cent of the shares and 90 days for the remaining 50 per cent from the date of allotment. However, there are no mandatory lock-in period for non-anchor QIBs participating in IPOs.
Prithvi Haldea, Chairman, PRIME Database said the current trend of MFs playing an active role in IPOs will continue in the near future given the strong pipeline of issues and steady inflows in MFs.
With the ability to now write large cheques, MFs are also playing a crucial role in setting IPO price by using their bargaining power in roadshows, he said.
Despite the market volatility and benchmark indices not delivering much return in this year, investors are betting big on MFs to tap the long-term India growth story, said Haldea.
Sunny Agrawal, Head-Fundamental Research, SBI Securities said there are fewer opportunities in the secondary market to make decent returns in the short to medium term.
Hence, with liquidity remaining strong many investors and institutions are deploying funds in businesses that are tapping the primary market, with good growth potential and robust fundamentals, he added.
However, he said the recent tepid listing for majority of the issues testifies the fact that majority of the issues are coming at fair value or at relatively expensive valuations, leaving very limited value for the incoming investors.
Few niche businesses with robust growth potential underpinned by multiple industry tailwinds are capable of attracting institutional interest despite issue coming at fair to expensive valuations, he added.
Published on October 11, 2025