Mutual Funds Become More Selective in IPO Investments as Institutional Bids Grow Larger

Key Takeaways

• Indian mutual funds are increasingly concentrating large institutional bids in selected public offerings and share placements, according to reporting published on 13 October 2026.
• Institutional investment banking executives reported that bids of ₹1,500 crore to ₹2,000 crore from large fund houses are becoming more common.
• Mutual funds accounted for approximately 76.5% of allocations in LIC's August 2026 offer for sale, highlighting domestic institutional participation.

Mutual Funds Focus on Larger Primary Market Transactions

Indian mutual funds are directing increasingly large institutional bids towards selected primary-market transactions, reflecting changes in how major asset management companies participate in equity fundraising.

A report published by Mint on 13 October 2026 described a more concentrated approach to IPOs, qualified institutional placements (QIPs) and other institutional share sales.

The report indicated that large fund houses are focusing their participation on selected transactions, including offerings in financial services, manufacturing and technology-related businesses.

This activity coincides with higher inflows into the mutual fund industry.

AMFI data showed that systematic investment plan contributions reached ₹32,490 crore in September, while equity-oriented schemes received net inflows of ₹38,306.55 crore.

These figures establish the scale of current mutual fund subscriptions, although monthly inflows cannot be directly equated with the amount available for IPO investments.

Institutional Bids Reach Thousands of Crores

Industry executives cited in the Mint report described a rise in the size of bids submitted by large mutual fund houses.

Amit Ramchandani, chief executive officer and head of investment banking at Motilal Oswal, indicated that bids ranging from ₹1,500 crore to ₹2,000 crore are becoming more common in selected transactions.

These figures refer to institutional bidding activity rather than confirmed allocations.

In heavily subscribed issues, mutual funds may receive considerably fewer shares than requested.

The size of an institutional bid therefore does not necessarily represent the final amount invested.

LIC Offer for Sale Demonstrates Institutional Participation

The government's August 2026 offer for sale in Life Insurance Corporation of India provides an example of institutional demand.

The transaction involved the sale of up to 6.5% of the government's stake, with an offer size of approximately ₹31,552 crore.

According to the figures reported by Mint, domestic mutual funds accounted for roughly 76.5% of the total allocation.

Their combined ownership in LIC increased from below 1% at the end of July to approximately 5.4% by the end of August.

ICICI Prudential Mutual Fund and SBI Mutual Fund together acquired shares worth approximately ₹17,145 crore, according to figures cited in the report.

Other transactions, including institutional placements involving Piramal Finance and APAR Industries, were also reported to have attracted large bids from domestic fund houses.

Primary Market Activity and Fund Investments

Mutual funds participate in IPOs and institutional placements as part of their portfolio management activities, subject to scheme investment objectives and applicable regulations.

The recent reporting points to larger commitments in selected transactions, although it does not establish a comprehensive industry-wide decline in the number of deals pursued.

A higher bid amount also does not indicate that the investment will generate positive returns after listing.

The development reflects the growing scale of domestic institutional capital and its participation in India's primary equity market.