India’s Primary Market Looked Broad, but Participation Was Anything but Even
At first glance, India’s IPO market in 2025 appeared active and well-balanced. Nearly 100 mainboard IPOs, for which anchor-level data was available, tapped the capital markets through the year, attracting participation from retail investors, mutual funds (MFs), foreign portfolio investors (FPIs), and anchor investors. Headline numbers suggested diversity and depth.
However, a closer examination of who consistently participated tells a more concentrated story. Institutional capital, particularly from domestic mutual funds, was not spread evenly across deals. Instead, participation was clustered among a small group of repeat institutions, creating a narrow institutional spine that effectively held the market together.
This distinction matters because the health of an IPO market is defined not just by how many deals get done, but by how risk, pricing power, and post-listing stability are distributed.
Mutual Fund Participation Was Selective, Not Broad-Based
One of the clearest signals of concentration was the limited spread of mutual fund participation. While roughly a quarter of IPOs in 2025 saw MF participation at the anchor stage, the same funds appeared repeatedly across those deals.
Out of 36 mutual funds that participated as anchor investors during the year:
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Only two funds appeared just once
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Thirty-four funds participated across multiple IPOs
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The top five institutions accounted for about 30% of all anchor appearances
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The top ten accounted for 50.9% of total anchor participation
This pattern shows that institutional involvement was driven by repetition rather than rotation. As one market participant put it, “This wasn’t many funds taking small, diversified bets. It was a few balance sheets showing up again and again.”
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FPI Presence Looked Broad, but Economic Exposure Was Fragmented
On paper, foreign portfolio investor participation appeared more diversified. FPIs featured across a meaningful number of IPOs, but the apparent breadth masked a different reality. FPI investments were fragmented across hundreds of offshore vehicles, funds, and sub-accounts.
While disclosures show numerous FPI names, it is difficult to assess true economic concentration because:
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Multiple vehicles may represent the same underlying sponsor
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Ticket sizes were often smaller and more dispersed
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Holding behaviour was less visible than for domestic mutual funds
As a result, the stabilising force in anchor books came predominantly from domestic institutions rather than offshore capital.
Large IPOs Depended Heavily on Institutional Anchoring
Most IPOs in 2025 were not mega issues, but capital mobilisation was highly uneven. Only eight IPOs were sized above Rs 5,000 crore, yet these large offerings raised Rs 78,300 crore—about 44.5% of the total Rs 1.76 lakh crore raised by the 103 IPOs in the dataset.
Retail participation alone cannot stabilise IPOs of this scale. Deals sized at Rs 10,000–15,000 crore require deep, patient capital at the anchor stage. In 2025, that role was fulfilled by a narrow set of institutions willing to write large cheques.
Average anchor ticket sizes illustrate this clearly:
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Large IPOs: ~Rs 25 crore per anchor ticket
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Smaller IPOs: ~Rs 5 crore per anchor ticket
This concentration meant that risk absorption was not widely distributed, but carried by a few repeat players.
Post-Listing Performance Reflects Institutional Stability
Returns data from 2025 further supports this structural interpretation. Large IPOs—those above Rs 5,000 crore—recorded:
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Average listing gains of about 18%
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Average current gains of around 27%
Smaller IPOs, by contrast, showed:
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Average listing gains of about 8.7%
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Average current gains of roughly 31%, but with much higher volatility
These figures are not return comparisons but indicators of post-listing behaviour. Large IPOs showed fewer sharp drawdowns and limited selling pressure—outcomes that are statistically inconsistent with weak anchor books or fast-churn participation.
As one banker observed, “Price discovery held in the bigger deals because the same institutions stayed invested. That stability doesn’t happen by accident.”
Why Concentration Matters for Market Resilience
When roughly a quarter of IPOs see MF participation, yet the same funds dominate those allocations, primary market risk is not diversified. Pricing power becomes centralised, and market resilience depends heavily on the behaviour of a small group of institutions.
This structure works well when:
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Liquidity is ample
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Volatility is contained
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Anchor investors remain engaged
But it also creates vulnerability. If a handful of anchor investors step back during periods of stress, deal flow and pricing discipline can weaken quickly.
That is why this observation matters as a year-end assessment rather than a short-term trading signal.
A More Disciplined, Underwriter-Like IPO Cycle
Compared with earlier IPO cycles, 2025 was notably less euphoric. Capital was more selective, participation was more disciplined, and institutions behaved less like momentum players and more like underwriters of risk.
The market did not rely on:
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Many institutions doing small, diversified bets
Instead, it relied on:
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A few institutions doing heavy lifting
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Larger ticket sizes
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Longer holding behaviour
This structure helped the market clear large deals and maintain post-listing stability—but at the cost of broader risk dispersion.
Investor Takeaway: Depth Came From Concentration, Not Breadth
India’s IPO market in 2025 functioned smoothly not because participation was widespread, but because a narrow institutional core absorbed risk and supported pricing. For investors, this underscores an important reality: headline participation numbers can be misleading.
As one market observer summed it up, “The IPO market looked broad, but its backbone was thin. Stability came from concentration, not diversification.”
That structural insight, more than listing-day returns, defines the true character of India’s IPO market in 2025.
