Mutual Funds Take the Lead in IPOs, Powered by Record SIP Inflows

Indian mutual funds are making bold moves in the initial public offering (IPO) space. They’re stepping up significantly in both the anchor and qualified institutional buyer (QIB) categories, areas where foreign players once dominated. What’s fuelling this shift? A flood of money from systematic investment plans (SIPs), which hit all-time highs in April and May 2025. Economists and bankers say this is reshaping the way India’s primary market operates.

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What’s Driving the Shift? SIPs Are Surging

The big story here is retail investors. They’re pumping consistent cash into the market through SIPs, ₹26,632 crore in April and even more in May, at ₹26,688 crore.

That’s a clear sign of growing confidence. Gone are the days of panic-driven withdrawals. As one top asset manager put it, “There’s no shortage of liquidity for mutual funds; that’s what’s fuelling their IPO investments.”

Anchor Books: Mutual Funds Are Gaining Ground

Remember when foreign investors dominated anchor book slots? That’s changing fast. Back in 2021, mutual funds held less than 30% of those bids. Now, they’re closing in on 36%, according to the Prime Database.

Anchor Books allows large investors to lock in shares before the IPO is made public, ensuring price stability and early liquidity. This setup is ideal for mutual funds with long-term investment goals. Meanwhile, the share of foreign investors in anchor books dropped from 63% to 51% over the same period. The takeaway? Domestic funds are finally getting the recognition and allocation they deserve.

QIB Participation: Mutual Funds Double Their Share

It’s not just Anchor Books. Mutual funds are also taking a bigger bite of the QIB pie, doubling their share from under 15% in 2021 to nearly 33% in 2025. Foreign institutional investors (FIIs) saw their stake drop from 63% to about 52%.

This marks a significant shift. Domestic funds are stepping in where foreign institutional investors (FIIs) once held sway. One banker (who asked not to be named) summed it up nicely: “We used to chase foreign capital with overseas roadshows. Now, local demand is strong enough. Mutual funds help reduce volatility and selling pressure post-listing.”

Mutual Funds Are Reshaping the IPO Game

Take recent IPOs, such as Hexaware, Ather Energy, Leela Hotels, Dr. Agarwal, and Aegis Vopak. They’ve all seen strong mutual fund participation. That’s a significant change. It shows how local retail money, channelled through SIPs, is becoming the backbone of the IPO market.

An executive from a leading fund house explained it like this: “Anchor slots let us buy big before stocks go public. With secondary market valuations all over the place, the IPO route offers more control and better pricing.”

Bigger Picture: Retail Power Reshaping Markets

Primary market activity is booming. Asset managers have more funds than ever, and companies are jumping in to make the most of the good mood. From mega-IPOs to follow-ons, asset management companies (AMCs) are at the heart of the action.

Retail investors, once considered bit players, are now the ones setting the tone. Thanks to SIPs, they’ve become a steady source of capital that’s influencing how fund houses make decisions, even in choppy markets.

The Bottom Line

Mutual funds are rewriting the IPO playbook in India. Powered by ₹26,000+ crore of monthly SIP inflows, they’ve become key players in both anchor and QIB categories, areas once dominated by foreign capital.

For companies, this means better pricing and a wider base of committed investors. For retail participants, it offers greater market stability and homegrown confidence.

As one institutional banker said, “It’s a win-win for everyone.” This isn’t just a trend; it’s a significant turning point in how Indian capital markets operate, driven by disciplined investors and the growing might of domestic mutual funds.