FII investment in IPOs drops 55% amid valuation concerns
What's the story
Foreign institutional investors (FIIs) are becoming more selective in their participation in initial public offerings (IPOs). This trend comes even as the primary market continues to see strong domestic demand. According to data from the National Securities Depository Limited (NSDL), FIIs have invested nearly ₹10,900 crore in October 2025 so far. This is amid a flurry of issues worth over ₹30,000 crore during the month.
Investment trends
FIIs have invested ₹54,277 crore in 2025 so far
In September, 25 IPOs with a total issue size of ₹13,300 crore saw FIIs invest just ₹3,278 crore. August was no different, with 12 IPOs worth ₹10,454 crore attracting about ₹4,070 crore from FIIs. So far in 2025, FIIs have invested ₹54,277 crore across launched IPOs that have raised a total of ₹1.21 lakh crore.
Participation decline
A stark contrast to 2024's performance
The current figures show a massive 55% drop from 2024 when FIIs invested ₹1.22 lakh crore across 91 IPOs that raised a total of ₹1.6 lakh crore. On average, FIIs have subscribed to about 46% of the total IPO issue size each month in 2025, compared to a whopping 77% in 2024. This shows their selective approach toward participating in new listings amid stretched valuations and moderated post-listing returns.
Performance analysis
How have IPOs performed this year?
Of the 85 mainboard IPOs that debuted this year, 29 opened below their issue price. Meanwhile, 27 posted modest gains between 1-10%. Twelve stocks gained between 11-20%, while another 13 rose between 25-50%.Only three stocks delivered listing gains above a whopping 50%. This performance has further made FIIs cautious about their investments in new listings.
Global shift
Global opportunities attracting FIIs's attention
Kranthi Bathini, Director - Equity Strategy at WealthMills Securities, has noted that foreign investors are now looking at global equity markets such as the US, China, and key European and emerging economies. The strong rally in AI-linked stocks and commodities such as gold, silver, and platinum has also drawn fresh allocations from FIIs. This combination of global opportunities and elevated domestic valuations has led to reduced foreign inflows into both the primary and secondary Indian markets.
Market shift
Domestic MFs fill the gap
Domestic mutual funds (MFs) have strengthened their presence in the primary market. According to a Moneycontrol report dated October 20, MFs have invested around ₹22,750 crore in IPOs so far this year. This accounts for nearly 19% of the total ₹1.22 lakh crore raised through the primary market this year. Fund houses deployed ₹15,158 crore through anchor investments and another ₹7,590 crore in the Qualified Institutional Buyer (QIB) segment between January and mid-October.