IPO Boom Gives Promoters Exit Route as They Pocket Bulk of Proceeds

India’s IPO market is buzzing in 2025—with 32 mainboard listings raising approximately ₹54,400 crore in the first seven months. Leading the charge was HDB Financial Services, which alone raised around ₹12,500 crore. Despite healthy investor interest, a significant concern has emerged: around 60% of proceeds went to existing shareholders, while the remaining 40% funded company growth.

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Strong Listing Rally, but Does It Fuel Growth?

The resurgence follows a sluggish latter half of FY25. Market sentiment has brightened, driven by early listings performing strongly, despite some issues underperforming post-listing.

Still, many IPOs have leaned heavily on the offer-for-sale (OFS) mechanism, meaning existing promoters and investors cash out rather than inject fresh capital into the business. In 2025, five IPOs were fully OFS, 11 were entirely fresh issues, and 16 featured a mix. Of the total ₹54,400 crore raised, ₹33,300 crore went to selling stakeholders, while ₹21,200 crore went to the companies themselves.

Investor Caution Amid Exit-Heavy IPOs

IPO investors, particularly retail participants, are drawn to attractive listing day returns. Yet, they should be cautious: when the majority of money raised flows to insiders, less capital reaches growth initiatives. IPO structures skewed toward OFS can limit long-term value generation.

When Fresh Capital Matters

Fresh-issue components infuse companies with working capital, expansion budgets, and debt repayment funds—directly contributing to corporate growth. In contrast, OFS-heavy IPOs may lead to stagnated fundamentals, especially if post-listing performance lags.

Conclusion

While 2025’s IPO wave has reinvigorated investor enthusiasm and raised substantial funds, the predominance of exit-driven offerings raises questions about their long-term impact. Only a smaller portion of the proceeds supports actual business expansion. Investors should weigh the nature of IPO structures carefully—seeking those that channel capital toward real growth.