India’s chief economic adviser V. Anantha Nageswaran on Monday cautioned that the country’s booming IPO market is increasingly serving as an exit mechanism for early-stage investors rather than a platform for raising long-term capital — a shift he said undermines the spirit and intended purpose of public markets.
“India’s equity markets have grown impressively, but IPOs have increasingly become exit vehicles for early investors rather than mechanisms for raising long-term capital. This undermines the spirit of public markets,” Nageswaran said at a CII event in Mumbai.
Multiple data points across regulatory and industry sources underline the trend highlighted by the CEA. Sebi data shows that of the 55 IPOs launched in April–September of 2025-26, raising ₹64,927 crore, 47 per cent of the funds came through offer-for-sale (OFS) by existing shareholders. The dominance of OFS was even sharper in 2024-25, when 64 per cent of the ₹1,62,517 crore raised via 79 issuances came from secondary sales rather than fresh capital infusion into companies.
Private equity and venture capital exit patterns reflect a similar shift. Data compiled by Ernst & Young and IVCA indicates that of the $11.6 billion in PE/VC exits during the first half of 2025, $1.5 billion was via the IPO route — a 103 per cent surge from last year. In the September quarter, 2025, IPO-led exits totalled $0.4 billion.
Analysts note, however, that exits are an integral part of the investment cycle for PEs and VCs, who typically operate with defined timelines and return expectations. “Some early investors may retain a residual stake post-listing, but exits at various stages — including through IPOs — are quite normal for private equity, venture capital and even angel investors,” a market analyst said.
Nageswaran stressed that India’s capital markets must evolve “not just in scale, but in purpose”, warning against “celebrating the wrong milestones” such as booming market capitalisation or record derivatives turnover. These metrics, he said, do not represent financial sophistication and risk diverting domestic savings away from productive investment.