Meesho Prioritizes SBI MF in Oversubscribed IPO

Management’s Direct Role in Anchor Allocation

Meesho’s decision to allocate a disproportionately large portion of its Rs 2,439-crore anchor book to SBI Mutual Fund was taken by the company’s management, not its merchant bankers, according to multiple sources familiar with the matter. This decision highlights a growing trend in India’s IPO landscape, where issuers increasingly engage directly with prospective investors ahead of the offer, negotiating both price and allocation, sometimes even overruling banker advice. The episode has also underscored the lack of a formal framework for fairness in anchor allocation, leaving room for subjective judgments and disagreements among institutional investors over what constitutes equitable distribution.

Investor Split Over Allocation

The move triggered a rare divergence among large investors. Capital Group, Norges Bank Investment Management, ICICI Prudential Mutual Fund, and Nippon India Mutual Fund chose to opt out of the anchor book, expressing dissatisfaction with the scale of allocation granted to SBI MF. A senior executive at ICICI Prudential noted that the decision was driven by concerns about setting a precedent, as the allocation offered to them was significantly smaller than that granted to India’s largest domestic fund house.

Sources revealed that Meesho offered SBI MF approximately Rs 600 crore in the anchor tranche, compared with only Rs 100 crore for ICICI Prudential MF — a discrepancy described by insiders as “gaping.” The company declined to revise the allocation, citing prior commitments and the need to maintain trust with SBI MF.

Final Allocation Details

Meesho maintained its position. In the final allocation announced on December 2, SBI MF received Rs 603 crore. The next largest portions went to GIC and the Monetary Authority of Singapore jointly at Rs 200 crore, followed by Fidelity with Rs 148 crore and BlackRock with Rs 75 crore. Among domestic funds, Axis Mutual Fund — the second-largest after SBI MF — received a mere Rs 48 crore.

Rationale Behind the SBI MF Preference

Sources close to Meesho highlighted several reasons for the outsized allocation. SBI MF had communicated both price and quantity well in advance, enabling the company to build the anchor book effectively. The fund also expressed readiness to continue buying in the main IPO and even post-listing at or below the offer price. Additionally, SBI MF’s track record as a long-term investor in new-age companies provided confidence to Meesho that the fund would offer stability rather than short-term trading activity.

SBI MF’s Selective Investment Approach

SBI Mutual Fund is known for its highly selective IPO investment strategy, conducting thorough research on companies over six months ahead and signaling its price and quantity preferences early. This approach positions SBI MF as a genuine anchor investor rather than a follower gauging market sentiment. The fund’s willingness to invest during the main book and after listing, even if the stock underperforms initially, is particularly valuable in tech IPOs that often face volatility and early exits.

Anchor Oversubscription and Market Dynamics

While IPO allocations often spark debate among institutional investors, the contention intensified as Meesho’s anchor book became oversubscribed nearly 30 times. Market participants note that headline oversubscription figures can be misleading, as anchor investors are not required to deposit funds during bidding. Many place large bids to remain in contention, knowing they will likely receive only a fraction of the requested allocation.

Meesho IPO: Key Details

Meesho’s IPO opens on December 3, 2025, and will run until December 5, 2025. The public issue is valued at approximately Rs 5,421.20 crore, comprising a fresh issue of Rs 4,250 crore and an offer-for-sale of Rs 1,171.20 crore. The price band has been fixed at Rs 105–Rs 111 per share (face value Re 1), valuing Meesho at roughly Rs 50,096 crore at the upper end. The listing is expected on December 10, 2025, on both BSE and NSE.

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Sorit Chaudhary

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