Whalesbook
India's IPO Landscape: A Paradox of High Exits and Shrinking PE/VC Share
In 2025, India's initial public offering (IPO) market witnessed a significant financial feat: private equity and venture capital firms extracted the largest sum of cash in four years, totaling ₹20,643 crore. This record sum, however, is juxtaposed with a striking decline in their market share, which has shrunk to its lowest point in at least a decade.
The Core Issue: Value vs. Volume
Despite extracting substantial capital, PE/VC firms backed fewer than one in five IPO listings in 2025. This marks a considerable drop from around one in four listings in 2024 and one in three in 2023. The value of these stake sales in 2025, while high, was surpassed only by the all-time record of ₹31,684 crore in 2021, a period characterized by abundant global liquidity and a boom in technology listings.
Financial Implications
The ₹20,643 crore exit value signifies strong returns for these investors. Yet, the declining proportion of PE/VC-backed companies in the broader IPO landscape is a notable trend. In 2015, these firms were involved in nearly 62% of all IPOs. This figure steadily decreased to 50.8% in 2021, then to 36.8% in 2023, 26.4% in 2024, and reached an all-time low of 18.45% in 2025.
Expert Analysis
Deven R Choksey, founder and managing director of DRChoksey FinServ, views this trend not as a weakness in PE/VC strategies but as a sign of a robust broader economy. He suggests that more traditional businesses in sectors like manufacturing, hospitality, and consumer tech are now mature enough to list without venture capital backing. Choksey also noted a rise in large-scale promoter exits and an increase in listings from domestic firms and Public Sector Undertakings (PSUs).
Pranav Haldea, managing director of Prime Database Group, offers a nuanced perspective. He states that while the number of PE/VC-backed IPOs is at a 10-year low, it does not indicate reduced investor activity in India. Instead, it could suggest that these investors are choosing to hold onto their investments longer, opting not to exit fully at the time of IPO. He anticipates this trend of primary market activity, and subsequent stake sales, could gain momentum in 2026.
Historical Context and Future Outlook
The IPO market has seen substantial growth, with 365 companies raising a record ₹1.95 trillion through IPOs in 2025, exceeding the ₹1.90 trillion raised by 336 IPOs in 2024. Data shows that over 2024 and 2025, 701 companies raised ₹3.8 trillion, surpassing the ₹3.2 trillion raised between 2019 and 2023. Young companies, less than 20 years old, contributed significantly, accounting for approximately 53% of the capital raised in the past two years.
Looking ahead, several prominent PE-backed companies are preparing for IPOs in 2026. These include SoftBank-backed Oyo and General Atlantic-backed PhonePe, with PhonePe aiming to raise $1.5 billion. Blackstone-backed Horizon Industrial Parks and Y Combinator-backed Zepto Ltd. have already submitted their draft IPO papers, signaling continued activity in India's primary market. Vivek Soni of EY India suggested that a favorable US-India Free Trade Agreement (FTA) could further boost private dealmaking and sentiment.
Impact
This trend of high PE/VC exit values alongside shrinking market share in IPOs suggests a maturing Indian economy. It indicates that more companies can access public markets independently, while PE/VCs are still finding ways to realize significant returns. For investors, it signals a diverse IPO pipeline with a mix of traditional and new-age businesses, potentially offering varied risk-reward profiles. The sustained liquidity and robust deal-making indicate continued investor confidence in India's growth story.
Impact Rating: 8/10
Difficult Terms Explained
- IPO (Initial Public Offering): The process by which a private company offers its shares to the public for the first time, becoming a publicly traded company.
- PE/VC (Private Equity/Venture Capital): Investment firms that pool money from investors to buy stakes in private companies or startups, aiming for high returns upon exit, often through IPOs or acquisitions.
- Stake Sales: The selling of shares or ownership in a company by an investor or group of investors.
- Primary Market: The market where new securities are issued for the first time, such as through an IPO.
- Liquidity: The ease with which an asset can be converted into cash without affecting its market price. High liquidity generally means assets are easily traded.
- Promoter Exits: When the original founders or owners of a company sell a portion or all of their stake, often during an IPO or later sale.
- PSU (Public Sector Undertaking): A government-owned corporation or enterprise.
- Capital Market Valuations: The estimated worth or price of assets or companies traded in public markets, often based on financial performance, growth prospects, and market sentiment.
- FTA (Free Trade Agreement): An international treaty that lowers barriers to trade between countries, facilitating economic exchange.