Small IPOs face listing delays as mutual funds become picky

Large mutual funds in India are becoming more selective about investing in smaller stock market listings, making companies that seek to raise between ₹400 crore and ₹2,000 crore either wait out a volatile market or turn to private equity and venture capital firms for funds.

- Priyamvada C.

"There is clearly more selectivity. In the ₹2,000-3,000 crore range, deals need sharper differentiation on growth, quality and valuation to see strong traction," said Raghav Gupta, joint chief executive officer, IIFL Capital. He added that there is rising participation from family offices, high networth individual/ ultrahigh networth individual (HNIs/UHNI) investors, and alternative investment funds (AIFs) while select global long-only investors continue to back mid-sized, high-quality stories.

The shift is changing the primary market landscape. Domestic institutional investors (DIIs), led by mutual funds, are showing increased preference for bigger, more liquid deals and leaving a growing pile of mid-sized initial public offering filings in limbo.