Despite a shrinking market share, private equity (PE) and venture capital (VC) firms have achieved a four-year high in stake sales in Indian initial public offerings (IPOs) in 2025. These investors offloaded ₹20,643 crore worth of stock, marking the highest amount since 2021. However, their involvement was limited to fewer than one in five listings this year, representing the lowest participation rate in at least a decade.
This divergence highlights a nuanced trend in the Indian IPO landscape. While PE/VC firms are capitalizing on opportunities to exit investments through IPOs, their overall influence, measured by the proportion of IPOs they back, has diminished considerably.
Several factors could be contributing to this trend. The robust IPO activity of previous years, particularly in 2024, created an opportune environment for PE/VC firms to capitalize on high valuations and exit their investments. Mukesh Mehta, Senior Managing Director at Blackstone, noted that IPO valuations were often double those offered in the PE market. However, a stock market slump that began in October has reduced IPO activity.
The PE industry anticipates a rise in deal activity in financial services, IT, and healthcare. An EY and IVCA report revealed that PE and VC investments in 2024 amounted to $56 billion, a decrease from the $76.7 billion recorded in 2021.
The increasing participation of other investor categories could also explain the declining market share of PE/VC firms in IPOs. Foreign Portfolio Investors (FPIs) have consistently shown faith in the Indian primary market. FPIs have been net buyers of domestic shares totaling ₹2.44 trillion since 2015, despite selling shares in cash markets in six of the eleven years through 2025.
Looking ahead, industry experts suggest a potential shift in focus towards investing and acquiring rather than exiting. Sumeet Narang, Founder of Samara Capital, anticipates deal flow to accelerate if public markets remain subdued, as many businesses and shareholders seek liquidity. Manish Kejriwal, founder of Kedaara Capital, believes that the second half of 2025 will favor buyers over sellers. In 2024, his firm completed only two to three deals, compared to their usual five to six.
