Wealth boom will squeeze India IPO allocations

Meesho

08/01/2026 02:05

The author is a Reuters Breakingviews columnist.  The opinions expressed are her own.

By Shritama Bose

MUMBAI, Jan 8 (Reuters Breakingviews) - India's sizzling market for initial public offerings is sparking friction. Fund managers including Aberdeen ABDN.L, Capital and the asset management business of Nomura quietly boycotted e-commerce retailer Meesho's MEES.NS market debut in December after a unit of State Bank of India SBI.NS grabbed a hefty slice of the 54.2 billion rupees ($596 million) deal reserved for anchor investors. The standoff highlights growing pains within the country's $900 billion mutual fund industry.

SBI Funds Management, which oversees $139 billion of assets, picked up about a quarter of the shares Meesho offered to anchor investors, IFR reported at the time. That's more than twice the share a single buyer typically gets in a large offering. Among others walking out in protest were Norway's Norges Bank Investment Management and Nippon Life India as well as SBI compatriot ICICI Prudential Asset Management IICL.NS. For the issuer, a fight to own its stock is not a problem.

It does suggest a mismatch, however. SBI, which runs its investment unit in partnership with France's Amundi AMUN.PA, sweeps up roughly 15% of the 299 billion rupees ($3.32 billion) the industry gets every month in subscription payments towards equity funds, known as systematic investment plans. Inflows are set to increase as Indians become more affluent and move more of their money from bank deposits to the financial markets. SIPs, for example, are growing 25% annually, per Crisil Intelligence. And because of capital controls, Indians' growing wealth is largely captive to the domestic financial markets.

Large IPOs provide an easy opportunity to put that money to work because they let asset managers buy large chunks of stock in one shot, typically not an option with already listed companies. Trouble is, the amount of equity capital raised in IPOs and private placements is far more uneven than SIPs' growth. Proceeds last year were $55 billion, 20% below the 2024 tally, per Dealogic data. Analysts at Axis Capital expect demand for stock to overshoot supply in the next financial year.

That means more Meesho-style tussles between investors are likely. In the short term, that might push up valuations - shares in Meesho have jumped 64% since last month's IPO. Longer term, unless the supply of quality companies - and future earnings power - keeps up with the pace of financialisation, asset prices risk getting inflated. The Meesho spat is an early sign of potential distortions.

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CONTEXT NEWS

Major Indian and global asset managers boycotted the anchor tranche of Indian e-commerce company Meesho's 54.2 billion rupees initial public offering in protest at what they saw as an unfairly generous allocation to SBI Funds Management, IFR reported on December 5, citing unnamed people familiar with the transaction.

Aberdeen, Capital, Norges Bank Investment Management, Nomura Asset Management and mutual fund units of asset managers ICICI Prudential and Nippon India were among those that chose to withdraw from the anchor tranche rather than get fewer shares than they wanted, the report added.

Funds managed by SBI were allotted around 24.6% of shares in Meesho offered to anchor investors, according to the company's filings with stock exchanges.

Net flows into equity mutual funds are surging https://www.reuters.com/graphics/BRV-BRV/zdpxjgqoypx/chart.png

(Editing by Una Galani; Production by Aditya Srivastav)

((For previous columns by the author, Reuters customers can click on BOSE/shritama.bose@thomsonreuters.com))