PMS investors pile into pre-IPO bets as unlisted equity surges 63% in a month

PMS Investment

One of the strongest emerging signals from the PMS industry in September 2025 was the sharp rise in appetite for pre-IPO and unlisted equity opportunities, even as listed-market flows cooled. The APMI Compendium shows that unlisted equity exposure in discretionary PMS portfolios surged 63% month-on-month, the biggest jump in the equity mix. Though this still forms a small slice of total AUM, it marks the clearest indication yet of a pivot toward private-market opportunities.

Co-investment books — often used for concentrated pre-IPO bets — also reflected this trend. Co-investment AUM grew 3% MoM, driven almost entirely by a 7% rise in unlisted equity allocations.

This shift comes at a time when SEBI has banned mutual funds from participating in pre-IPO placements. In a letter to the Association of Mutual Funds in India (AMFI), the regulator clarified that all MF scheme investments in equity and equity-related instruments must be restricted to securities that are listed or to be listed. Since pre-IPO placements do not fall under “to-be-listed” — unlike anchor allocations in an IPO — mutual funds have effectively been shut out of the segment.

The move has unsettled several fund houses that viewed pre-IPO investing as a rare alpha source. Pre-IPO placement do not offer any pricing advantage to investors but firm allotment ensures that investors can buy the desired quantity, than leaving it to chance determined by the level of oversubscription.

While regulatory sources say the change is intended to enhance investor protection by preventing schemes from taking unlisted exposure, mutual fund insiders argue it deprives MFs of a lucrative opportunity that could otherwise benefit retail investors.

With MFs now restricted to the anchor and regular institutional quota of IPOs, PMS and AIFs have been left with a clearer runway to build pre-listing positions — and the timing couldn’t be more opportune. The primary market is in full swing, with strong oversubscriptions, blockbuster listings and a growing pipeline of new-age and manufacturing companies.

Some recent IPOs have delivered double-digit listing gains, drawing in HNIs seeking differentiated alpha, and December is shaping up to be one of the busiest IPO months ever.

Against this backdrop, PMS managers can accumulate pre-IPO positions with greater certainty that mutual funds will step in as large buyers post-listing. Rana said the rise in unlisted exposure is “opportunistic positioning and potentially an early signal of a structural shift, but not yet a full-fledged reallocation trend.”