FPIs Exit 60% of IPO Anchors in a Year as Domestic Funds Hold Firmer

Foreign portfolio investors sold around 60% of their mainboard IPO anchor allotments within a year, nearly double the mutual-fund rate, according to a SEBI study of 242 issues listed between April 2022 and October 2025. The absolute exit reached Rs 22,474 crore from an FPI allotment of Rs 37,491 crore.

Mutual funds, which took the second-largest slice, sold about 38% or Rs 12,228 crore from Rs 31,529 crore. Aggregate anchor selling across all categories hit roughly half the original allotment by day 365. The pattern supplies a clear second-order reason for SEBI’s recent moves to lock more of the anchor book for domestic long-term money.

Who Took the Biggest Slice and Who Sold It

FPIs captured 43.8% of total anchor allotment value. Mutual funds followed at 38.5%. Other QIBs such as insurers and banks took 10.5%, while alternative investment funds held 5.3%. The same ranking largely held for absolute selling.

The SEBI study on exit behaviour of anchor investors was prepared by officers Laltu Pore and Pampana Hari Nayak Akshay of the Department of Economic and Policy Analysis. It tracked depository holdings at 29, 33, 60, 93, 180 and 365 days from allotment.

Selling Stays Quiet Right After Unlock Then Climbs

Under current rules, 50 percent of anchor shares locked for 30 days and the rest for 90 days from allotment. Immediate dumping after the first unlock proved limited.

1. Around day 30 (first unlock): Aggregate weighted exit just 3.2%. Many issues saw zero selling; 192 of 242 recorded under 25% exit.
2. By day 60: Cumulative exit rose to about 8%.
3. After second unlock near day 90: Exit reached 17.3%.
4. Day 180 (167-IPO cohort): 34% sold.
5. Day 365: 51% of anchor holdings gone.

FPIs moved faster at every checkpoint after the first window. By 90 days they had exited around 20% of their allocation versus roughly 15% for mutual funds. The gap then widened sharply.

Smaller Issues Lose Anchors Fastest

Issue size showed a clear inverse link to exit intensity. Sub-Rs 250 crore IPOs recorded the sharpest departures at every horizon.

• IPOs up to Rs 250 crore: 9.1% exit at 30 days, 20.3% at 60 days, 32.4% at 90 days, and 72.5% by one year.
• IPOs of Rs 1,001-2,500 crore: only 40.8% exited by day 365.
• Larger books generally saw slower, more partial selling even among FPIs.

In the smallest bucket a handful of complete FPI exits appeared. Mutual funds never recorded a 100% exit in any size category. The pattern leaves thinner aftermarket support precisely where liquidity is already thinner.

Price Pressure Shows Up When Exits Spike

Heavy first-unlock selling coincided with measurable short-term price weakness. The study found a directionally negative relationship that was strongest around the 30-day window and milder at 90 days.

• High-exit stocks (more than 10% of anchor portion sold): average price decline of about 3.5% between T+29 and T+33; median decline near 6%.
• Low-exit stocks (up to 2.5% sold): average decline of only 0.4% in the same window.
• Who drove the heavy bucket: FPIs averaged 24.5% exit versus 11.5% for mutual funds.

That secondary supply lands on the same stocks that just listed, often before broader institutional interest has deepened. Retail buyers who entered on listing-day strength absorb part of the overhang.

Domestic Funds Keep More of Their Allotments

Mutual funds displayed consistently lower exit intensity and higher zero-exit counts. After the first lock-in, 104 IPOs showed zero MF selling. Even at 90 days, MF exits stayed mostly in the under-25% range, with only six issues above 50% and none at 100%.

Mutual Funds were notably more conservative than FPIs. This indicates MFs are more patient holders of their anchor allocations.

The authors of the SEBI paper noted the contrast in both percentage and distribution terms. FPIs showed higher median exit, wider interquartile range and a heavier upper tail. Absolute supply still mattered for both: FPIs generated roughly Rs 1,750 crore, Rs 4,800 crore and Rs 10,400 crore of secondary selling at the first unlock, day 60 and second unlock respectively, while mutual funds contributed Rs 1,300 crore, Rs 3,200 crore and Rs 6,800 crore.

Crowd commentary on X quickly linked the patience gap to broader questions about IPO quality. Some market participants argued that even the slower domestic exits still leave unit-holders exposed if many new listings later trade well below issue price. The data itself stays silent on motive; it simply shows different holding horizons.

SEBI Already Rewrote the Anchor Rules for Longer Money

The exit numbers arrive after SEBI had already begun reshaping the anchor framework to favour longer-horizon domestic capital. A July 2025 consultation paper on long-term institutional participation proposed lifting the reserved portion for mutual funds, insurers and pension funds from one-third to 40% of the anchor book, with a one-third floor still reserved for domestic mutual funds and the balance for life insurers and PFRDA-registered pension funds.

Later amendments also expanded the number of permissible anchor lines for larger issues and eased participation for multi-fund FPI groups. The explicit goal was deeper, more stable books. The new study supplies the behavioural evidence: foreign anchors supply the bulk of the post-lock-in float and the sharpest price hits, while domestic institutions retain more paper.

That second-order effect now sits beside other FPI flows. Periods of broader FPI outflows from Indian equities amplify the secondary supply that arrives when anchor lock-ins expire. Issuers planning books for the rest of 2026, including those that rode one of 2026’s busiest IPO weeks, face a clearer trade-off between headline demand and aftermarket stickiness.

Smaller companies feel the difference most. Their higher exit rates leave thinner support just as free float expands. Larger issues absorb the same behaviour with less visible damage. Retail and non-institutional buyers who rely on the “anchor quality” signal therefore receive uneven protection depending on issue size.

The study does not prescribe new lock-in lengths. It simply maps what the existing 30/90-day split actually produced across three and a half years of listings. The numbers show that anchors remain a powerful price-discovery tool on the way in and a measurable source of supply on the way out, with FPIs providing most of that supply and domestic funds providing most of the remaining stickiness. SEBI’s recent reservation tilt already treats that distinction as permanent market design rather than temporary behaviour.

Frequently Asked Questions

What lock-in periods apply to anchor investors in mainboard IPOs?

Of the shares allotted to an anchor investor, 50% remain locked for 30 days from the date of allotment and the remaining 50% stay locked for 90 days. The split has been in force for issues opening on or after 1 April 2022; before that the entire anchor allotment carried a uniform 30-day lock-in.

How much of the anchor book do FPIs and mutual funds typically receive?

Across the 242 IPOs in the SEBI sample, FPIs received 43.8% of total anchor allotment value and mutual funds received 38.5%. Other QIBs including insurers and banks took 10.5% and AIFs took 5.3%.

Do smaller IPOs really see higher anchor exits?

Yes. In the one-year cohort, IPOs with issue size up to Rs 250 crore saw 72.5% of anchor holdings sold by day 365, compared with 40.8% for IPOs in the Rs 1,001-2,500 crore band. Early-window exits were also several times higher in the smallest size category.

Is heavy anchor selling linked to immediate price drops?

Stocks where more than 10% of the anchor portion was sold in the first unlock window recorded an average price decline of about 3.5% (median around 6%) between T+29 and T+33. Stocks with exits of 2.5% or less saw only a 0.4% average decline in the same window. The link was weaker around the 90-day unlock.

Why have mutual funds shown lower exit rates than FPIs?

The SEBI paper documents the difference without assigning motives. Mutual funds recorded far more zero-exit IPOs, lower median exit percentages and no instances of 100% exit across any size bucket, while FPIs showed higher medians, wider dispersion and occasional full exits in smaller issues.