India is currently experiencing one of the most vibrant initial public offering (IPO) cycles in the country’s market history. A total of around Rs 5.4 lakh crore has been raised by firms through IPOs between FY20 and FY24. At first glance, the situation appears to be a classic example of financial deepening. However, the capital markets matter for growth not because money changes hands, but because savings are transformed into new productive capacity. When the IPO boom is examined through this lens, the picture changes sharply. A growing share of India’s IPO proceeds may not be funding physical investment at all; increasingly, it is funding promoters’ exit.

The data points to a clear structural shift in India’s IPO market. In the mid-2000s, IPOs were overwhelmingly capital-adding: between 2007 and 2009, over 85-90% of proceeds came from fresh equity—Rs 32,000 crore in 2007 alone versus barely `2,000 crore via offer for sale (OFS). This balance weakened after 2010 and flipped decisively after 2016. Since 2017, OFS has dominated issuance, accounting for about 81% of proceeds in 2017, over 86% in 2020, and more than 60% through the post-pandemic boom.

Even as headline fundraising surged—from Rs 27,000 crore in 2020 to nearly Rs 1.7 lakh crore in 2024 and Rs 1.9 lakh crore in 2025 so far—the tilt toward exits has deepened: in 2024, about Rs 96,000 crore went to selling shareholders, and in 2025, OFS exceeding Rs 1.12 lakh crore has already dwarfed fresh capital of roughly Rs 75,000 crore. More listings, but far less net capital formation, leaving investors increasingly exposed to exit-driven offerings rather than growth-funding enterprises.

In contrast,........

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