SBI Funds IPO to test India's ₹4.81-trillion backlog
The ₹9,813-crore public offering from SBI Funds Management will signal whether India's capital markets can absorb a record issuance pipeline after a sluggish first half.
SBI Funds Management opened its ₹9,813-crore public offering on Tuesday, kicking off a critical test for India’s equity capital markets. The country's largest asset manager is seeking to gauge investor appetite after a sluggish first half of 2026 weighed down by geopolitical uncertainty and weak sentiment. Its subscription and listing performance will directly influence how dozens of pending issuers price and time their own listings.
A massive backlog is waiting in the wings. Data from Prime Database shows companies aiming to raise ₹2.97 trillion already hold regulatory approval from the Securities and Exchange Board of India, with documents for another ₹1.84 trillion awaiting clearance. This ₹4.81 trillion pipeline stands in stark contrast to the mere ₹22,600 crore raised during the first six months of 2026, a sharp drop from the ₹1.75 trillion raised in all of 2025.
The pending roster features some of India's most anticipated listings, including Jio Platforms, NSE, PhonePe, Zepto, and Oyo parent Oravel Stays. If several of these mega-issues launch simultaneously during a compressed second-half window, they risk temporarily draining institutional and high-net-worth capital. “If several mega IPOs are launched together, they could temporarily absorb institutional and HNI capital, forcing smaller issues to compete harder and making investors more selective on valuations,” said Kamraj Singh Negi, managing director and chief executive of investment banking at Pantomath Capital.
Issuers are already adjusting to this tighter environment. SBI Funds and its selling shareholders—State Bank of India and Amundi India Holding—set a price band of ₹545-574. At the upper end, the asset manager trades at roughly 38 times its FY26 earnings, a moderate valuation positioned below its closest listed peer, ICICI Prudential AMC.
A structural shift in primary market participation could cushion the blow of foreign investor hesitation. Redseer Strategy Consultants notes that domestic institutional investors now account for 35-45% of primary-market flows, overtaking foreign portfolio investors whose share has slipped to 15-25%. Retail and high-net-worth investors provide another 35-45% of demand. “DIIs have gained about 10 percentage points in primary-market flows, largely at the expense of FPIs. However, FPI investment in IPOs has remained broadly steady in absolute terms, unlike in the secondary market,” said Rohan Agarwal, partner at Redseer Strategy Consultants.
Redseer expects second-half proceeds to surpass 2025's total, potentially making 2026 India's largest fundraising year. Yet, regulatory approval does not guarantee execution. “The entire ₹4.8 trillion pipeline may not necessarily come to market, as issuers will assess geopolitical risks, market conditions and investor sentiment,” said Pranav Haldea, managing director of Prime Database Group.
