Finshots Daily SEBI wants mutual funds to stop chasing pre-IPO deals
Oct 28, 2025
Mutual funds face new restrictions as SEBI bans their access to pre-IPO markets, citing concerns over liquidity and transparent pricing. This change redraws the landscape for household savings, shifting pre-IPO opportunities to private equity and alternative funds. Companies preparing for IPOs will need to navigate these dynamics without the typical mutual fund checks. While some see this as a stabilizing move, others wonder how it will affect retail investors and future IPO pipelines.
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Pre-IPO Stretch Bent The Rule
- SEBI's rule required mutual funds to invest only in listed or to-be-listed securities, but 'to be listed' had been stretched into pre-IPO deals.
- Mutual funds used pre-IPO placements to gain early access and preferential pricing, bending the spirit of the rule.
SEBI Closes Pre-IPO Door For Funds
- SEBI told AMFI mutual funds cannot participate in pre-IPO placements and must access IPOs like other investors or as anchors a day before listing.
- The regulator's rationale: mutual funds shouldn't hold unlisted shares that break daily liquidity and transparent pricing promises.
Follow The Private Money If You Want Pre-IPO
- Expect mutual funds to shift pre-IPO return hunting to alternative investment funds and private equity players.
- Track AIFs and PE funds if you want early-unlisted exposure instead of relying on mutual funds.