Foreign portfolio investors (FPIs) have shown subdued appetite for Indian IPO markets in the past few months, and are likely holding back capital for follow-on offerings, qualified institutional placements (QIPs), and block trades, according to a top executive at one of the country’s leading investment banks.
“I see FII (foreign institutional investor) appetite being a little muted in the primary market, but pretty good when it comes to follow-ons, sell-downs and QIPs. Largely, this is the trend we are seeing,” Ramesh Srinivasan, managing director and chief executive of Kotak Investment Banking told Mint in an interview.
Data analysed by Mint shows that global institutional anchoring for domestic initial public offerings (IPOs) has seen a 40% year-on-year decline in the first five months of 2026. Foreign portfolio investors, who commanded 42% of the qualified institutional buyer allocation in mainboard IPOs between January and May 2025, saw their share retreat to just 25% this calendar year.
Meanwhile, Mint reported on 24 April that a total of ₹1.1 trillion has changed hands in open-market trades this year (as of 15 April), up over 25% from ₹86,810 crore a year earlier.
Secondary-market sales kept bookbuilders busy in May, too: Adani Ports and Special Economic Zone Ltd saw a ₹7,486 crore secondary sale on 4 May, Tencent exited PB Fintech Ltd via an ₹805 crore block deal on 9 May, followed by Billionbrains Garage Ventures Ltd’s ₹5,326 crore offering soon after, and One97 Communications Ltd’s ₹964 crore sale on 22 May.
The Adani Ports shares were picked up by US-based Capital Group, Tencent’s sale of PB Fintech stake saw Societe Generale and Morgan Stanley come in as buyers, Groww’s sale saw the likes of BlackRock and Abu Dhabi Investment Authority picking stock, and Citigroup and Goldman Sachs were among the main buyers of the Paytm block.
According to Ramesh, offshore investors are currently grappling with two major headwinds to their entry into Indian equities: high relative valuations and a massive distraction fuelled by the global artificial intelligence boom.
“Foreign investors have been careful or choosy about coming back,” Ramesh explained. Pointing to the shifting gravity in global tech equities, he noted that major tech players like the Taiwan Semiconductor Manufacturing Co, South Korea’s Samsung Electronics Co. and US’s Nvidia Corp. are absorbing massive amounts of global capital.
Meanwhile, traditional Indian IT services companies, once the darling of foreign investors, are facing intense scrutiny. These legacy tech firms that have failed to catch the AI wave are likely to struggle to capture investor interest moving forward, he said.
Despite the retreat of some foreign capital, Kotak remains highly optimistic about the domestic dealmaking environment. “The IPO pipeline […] is one of the best quality that I have seen in 8-10 years,” Ramesh said.
Notable large IPOs expected this year include Jio Platforms Ltd, Manipal Health Enterprises Ltd, National Stock Exchange of India Ltd, Zepto Ltd and SBI Funds Ltd. Kotak is a banker to all but one of these offers, and is the left lead on at least two of them.
However, translating this pipeline into actual listings requires navigating ever-changing geopolitical waters. Noting the ongoing global conflicts and macroeconomic uncertainties, Ramesh cautioned that “volatility is the enemy of IPOs.”
To offset this, Kotak is actively advising corporate clients to utilize the Securities and Exchange Board of India’s (Sebi) confidential filing route. This mechanism allows companies to clear regulatory hurdles without publicly exposing sensitive financial data, keeping their options open until market conditions stabilize.
“Over the years, most of the large issues will move to confidential filing. It’s only a matter of time,” Ramesh predicted, emphasizing that companies want to avoid leaving a “stale prospectus” in the public domain during choppy markets.
However, a new wave of IPOs, expected once the global headwinds subside, will not see overhyped premiums simply for being the new supply in a cold market, Ramesh said, crediting domestic institutions for enforcing strict pricing discipline.
“The best thing that has happened to Indian IPOs is mutual funds and insurance companies pricing them,” he said, noting the growing influence of mutual funds over company promoters. “They are disciplined, they have a set process, and they have an idea how to model future growth.”
The widening gap between private market valuations and public-market reality has already forced some of India’s prominent IPO-bound firms to retreat from the listing queue.
A Moneycontrol report from 16 March said a steep valuation mismatch with domestic institutional investors was the reason that digital payments giant PhonePe deferred its highly-anticipated $1.3 billion IPO, while consumer electronics brand boAt paused its second attempt at a public debut in January this year rather than succumb to heavy pricing discounts in a colder primary market.
Separately, Mint had reported on 9 March that Zepto’s valuation target for its proposed IPO had come under review in preliminary talks with domestic mutual funds.
The discipline enforced by domestic institutions marks a departure from the previous cycle of India’s IPO boom, which was characterized by frothy valuations and post-listing crashes. Today, companies and their founders are largely listening to domestic investors, realizing they have little choice if they want a successful debut. “There is no extravaganza that gets done,” Ramesh added.
