India regulator bars mutual funds from investing in pre-IPO placements, sources say

Sources say the Indian market regulator has proposed prohibiting mutual-fund houses from participating in pre-IPO equity placements, citing potential valuation and liquidity risks for retail investors. The move would reshape how asset managers approach early-stage offerings and could impact deal pipelines in India’s startup-ecosystem funding environment. The decision is part of a broader regulatory push to enhance stability in mutual-fund investing, especially as growth-oriented funds increasingly access high-return private offerings.