A Foreign Portfolio Investor, or FPI, is an overseas investor registered with SEBI to buy Indian shares, bonds and other listed securities without taking control of a company. FPIs include foreign mutual funds, pension funds, sovereign wealth funds, insurance companies and hedge funds, and they register through a designated depository participant under the SEBI FPI regulations. In an IPO, FPIs generally bid in the institutional category, and many are also anchor investors, since they are treated as qualified institutional buyers if they meet the conditions. Their flows matter because large foreign buying or selling can move the whole market, and their participation in an IPO is usually read as a sign that global investors find the valuation acceptable. Foreign ownership in Indian companies is also subject to sector limits and to the overall cap set by the Government and the company. FPI holdings are disclosed in the quarterly shareholding pattern, so investors can see whether foreign ownership is rising or falling after listing. FPI data is published daily by the depositories, which makes it a widely watched market indicator.
Example: A global pension fund registered as an FPI becomes an anchor investor in an Indian IPO and receives shares a day before the issue opens. Its name appears in the anchor list filed with the exchange.