Experts attribute the trend primarily to the fact that mutual funds are aflush with funds and the past many months have seen new records being created almost on a monthly basis in terms of net flows coming through systematic investment plans (SIPs).
Mutual funds are ramping up their weightage in fresh primary market issuances with aggressive bids in the institutional portion as well as the anchor book of all initial public offers (IPOs).
Data from Prime Database has showed that in the segments reserved for institutional investors – QIB or qualified institutional buyers – the average share of mutual funds has more than doubled from less than 15 percent in 2021 to nearly 33 percent in 2025.
In the anchor segment too, the average share of bids of mutual funds has risen significantly in the last few years. Mutual funds, which accounted for less than 30 percent of anchor allocation in 2021 now command an average share of nearly 36 percent in IPOs, though it has dipped compared to last year.
Incidentally, the rise in share of mutual funds has come at the expense of foreign portfolio investors (FPIs). Prime Database showed that the average share of FPI allocation in the anchor book has dropped to around 51 percent in 2025, from nearly 63 percent in 2021. In the QIB segment, share of FPIs has dropped to 52 percent now from 63 percent compared four years ago.
Experts have attributed this trend primarily to the flush liquidity with mutual funds, with past many months having seen record-setting monthly net inflow through the systematic investment plan (SIP) route.
During April, the net flows through SIPs hit an all-time high of Rs 26,632 crore, the third instance of monthly net flow breaching the Rs 26,000 crore mark. For the month of May as well, the monthly inflow into mutual funds through the Systematic Investment Plan (SIP) route came in at Rs 26,688 crore, a new high.
“There is no dearth of liquidity with mutual funds and that is the main driver of their investments in IPOs,” said the head of a mutual fund featuring among the top 10 in terms of assets under management (AUM).
“Anchor segment allows funds to buy large chunk of shares at one go before it hits the secondary markets, and that is a big factor considering funds typically eye large quantity deals. Also, with valuation concerns around the secondary market, the primary market is a good investment avenue for fund houses,” he added.
Story continues below Advertisement
Another investment banker said fund houses have reduced the dependency on foreign funds when it comes to the success of an initial offer, as a significant chunk of fresh supply of paper is being absorbed by the asset management companies (AMCs).
“Earlier, it was all about overseas road shows to attract foreign funds but now there is enough appetite locally as well. Of course, you cannot ignore the FPIs but the fact remains that a significant majority of the book can be sold domestically. And let us not forget the fact that MFs are long-term investors so it helps in reducing the post-listing volatility and selling pressure as well. So, it is clearly a win-win for all stakeholders,” he said on condition of anonymity.
In the current calendar year, IPOs of Hexaware Technologies, Ather Energy, Schloss Bangalore (Leela Hotels), Dr Agarwal’s Health Care and Aegis Vopak Terminals saw sizeable amount of bids pouring in from mutual funds.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.