India sees fourth largest fund raise globally via IPOs in 2025

India's IPO market secured $14.2 billion in CY25, ranking fourth globally, notably attracting $5 billion in foreign institutional investor (FII) capital despite an $18 billion FII outflow from secondary markets, according to Bernstein. This divergence highlights a distinct FII preference for primary market opportunities, where IPOs have delivered an average 22% listing gain and 61% have outperformed the Nifty in the last six months, contrasting with India's near-zero USD returns year-to-date. However, the analysis also indicates that roughly half of these IPOs yield negative returns after three months, with smaller issue sizes (under $20 million) demonstrating significantly higher initial returns (40%) compared to larger ones (over $1 billion) at 9%.

Analysis

Indian markets witnessed the fourth largest fund raise via the initial public offer (IPO) route in calendar year 2025 (CY25) at $14.2 billion, according to an analysis by Bernstein. The US at $52.9 billion topped this list, followed by Hong Kong ($23.4 billion) and China (16.2 billion). CLICK HERE FOR A DETAILED GRAPHIC In rupee terms, as many as 74 companies have raised Rs 85,241.08 crore from the primary markets in CY25, excluding the three big IPOs (WeWork India, Tata Capital and LG Electronics India) that opened for subscription in the past few days and aim to raise close to Rs 30,000 crore. Primary market mop-up in CY25 in India is the third highest amount raised in the country in the last five years, according to data, next only to Rs 1,59,783.76 crore raised via 91 offers in 2024 and Rs 1,18,723.17 crore raised in 2021 via 63 offers. FII pull out The IPO activity in India, Bernstein said, assumes significance as the markets have seen foreign institutional investors (FIIs) pull out nearly $18 billion in the secondary markets this year, but have invested $5 billion in the primary markets. Also Read This, it said, is in sharp contrast to the equity market performance, where India lags all major economies with almost zero returns in US dollar terms year-to-date (YTD). “Clearly, we’re seeing a distinction being made between the primary and secondary markets,” wrote Venugopal Garre, managing director and India head of research at Bernstein in a coauthored note with Nikhil Arela. Beating the Street A review of 161 companies that listed since January 2024, Bernstein said, highlights that investing in these new offerings has generally outperformed broad market indices: these stocks have beaten Nifty returns in five of the last seven quarters, with 61 per cent of these outperforming the broader Nifty index in the last 6 months. Listing gains, on average, came in at 22 per cent, and are better than for those who held these stocks for three months or longer – where roughly half the stocks gave negative returns over the long run, the note said. Of the 161 IPOs that have listed so far over the last 21 months have delivered an average of 22 per cent listing gains, Bernstein said, with over 53 per cent of these having given double-digit gains. FII outflows, according to the report, spiked during periods of heavy IPO activity, which suggests that institutions aren’t sticking long to securities in the secondary markets once they make gains in the primary issues. Size matters Among sectors, 28 (around 16 per cent) of the IPOs belonged to consumer tech, green energy or the digital sectors, Bernstein analysis suggests. “It also appears the lower the issue size, the better is the average return upon listing. For size below $20 million, we see almost 40 per cent returns, while it is 31 per cent for listings targeting $20-40 million funds. The least successful have been the over $1 billion IPOs, which have delivered only 9 per cent returns on an average," the note suggests. India's primary market demonstrated significant strength in CY25, attracting $14.2 billion and ranking fourth globally in fund raises, with 74 companies raising Rs 85,241.08 crore. This represents the third-highest primary market mop-up in the last five years, underscoring robust domestic capital activity. A notable divergence in capital flows reveals foreign institutional investors (FIIs) invested $5 billion into primary markets despite pulling nearly $18 billion from secondary markets. This FII preference for new offerings contrasts sharply with India's broader equity market, which has delivered near-zero returns in USD terms year-to-date. IPOs launched since January 2024 have generally outperformed, achieving an average listing gain of 22% and seeing 61% beat the Nifty over the last six months. However, this short-term success is tempered by the fact that roughly half of these stocks yielded negative returns after three months. Smaller IPOs, those under $20 million, delivered significantly higher average listing returns of almost 40%, in stark contrast to the 9% for issues exceeding $1 billion.

Key Decisions for Investors

• Evaluate Indian IPOs for tactical, short-term listing gain opportunities, recognizing the 22% average initial return and FII interest in primary market entries.
• Exercise prudence for long-term holds in newly listed companies, as historical data indicates a significant portion yielding negative returns beyond three months, aligning with the broader subdued equity market performance.
• Favor smaller IPOs, particularly those under $20 million issue size, given their demonstrated superior average listing returns of nearly 40% compared to larger offerings.
• Monitor FII capital flows closely for signs of rotation, as institutional selling in secondary markets has historically coincided with heightened primary market activity.