Mainboard IPOs in India raised ₹2.3 trillion over the past 18 months, but over 60% of this money went to existing shareholders via Offer-For-Sale (OFS) instead of funding business growth. Investors are now seeing lower listing gains and negative post-listing returns, highlighting the need to distinguish between fresh capital for expansion and cash exits by early backers.
India’s primary market has seen massive activity between January 2025 and August 2026, with mainboard initial public offerings raising approximately ₹2.3 trillion. While this shows strong interest from the public, a closer look at the data reveals that most of this capital is not being used to build new factories, hire staff, or fuel innovation. Instead, ₹1.45 lakh crore, or 61.2 percent of the total, went to early-stage investors and promoters through Offer-For-Sale transactions.
In an Offer-For-Sale, the company does not receive money from the public issue. The cash is paid directly to existing shareholders, such as private equity firms or promoters, who are using the IPO to sell their stakes and exit their investments. In contrast, only ₹92,175 crore, or 38.8 percent of the total funds raised, was fresh capital meant for the company’s own business purposes, such as debt repayment or expanding operations.
This trend of OFS-heavy IPOs has become a point of concern for market observers. When a significant portion of an IPO consists of an exit for old investors, the company itself does not get the resources to grow, even though the public may subscribe to the stock with the expectation of future expansion. Analysts note that while selling stakes is a natural part of a private equity investor’s cycle, the high volume of such exits at high valuations suggests a shift in the primary market's purpose.
Retail investors should note that the market environment has shifted recently. The excitement surrounding IPOs has cooled, with listing-day gains dropping to an average of 7 percent in FY26, down significantly from 29 percent in FY25. Even more concerning for long-term holders is that the average annual performance of listed IPOs in FY26 resulted in a negative return of 17 percent. This data suggests that high subscription numbers and strong hype do not necessarily translate into profitable investments for those who hold the shares after listing.
Seven major IPOs between April 2025 and July 2026 were structured entirely as OFS, meaning 100 percent of the proceeds went to exiting investors rather than the company. This list included notable names such as LG Electronics India, SBI Funds Management, and Bharat Coking Coal. While some companies still prioritize fresh capital, investors must now look beyond the brand name and the hype.
The most important monitorables for any upcoming IPO are the share of fresh capital versus the OFS component, the actual use of proceeds, and the valuation relative to growth expectations. Investors should carefully review the company’s prospectus to see if the fresh funds are being used for productive capital spending or merely to pay off old debts. As listing gains moderate and post-listing performance faces pressure, the quality of the business and the intent of the promoters are becoming more critical than ever.