Foreign investors are growing cautious about India's initial public offerings (IPOs), with their share of anchor investments sliding to a five-year low amid concerns over rich valuations, weak market performance and a global shift in interest towards artificial intelligence (AI). As overseas investors get pickier, domestic institutions are taking on a bigger role, gradually shifting the balance of India’s primary market.
Foreign portfolio investors' (FPI) investments as part of the total anchor book for initial public offerings (IPOs) slumped to its lowest in five years to 36.16% so far this year from its peak of 62.75% in 2021, according to data from PRIME Database. The previous low, as per the data, was 37.85 % in 2022.
FPIs’ share of the total IPO fundraising so far this year has also more than halved from its 2021 level to 11.61%, another five-year low.
The development has led to domestic institutional investors (DIIs) increasingly taking the place of foreign funds in anchor books. Mutual funds, insurance companies and other domestic institutions are emerging as important sources of capital, reducing companies' dependence on overseas investors to raise money.
However, not all issues have been deprived of foreign capital.