India IPO Market: Foreign Firms Capitalize on India’s IPO Surge

Foreign companies are increasingly leveraging India’s vibrant initial public offering (IPO) market to liquidate investments, sending billions back to their home countries. A Reuters analysis reveals that since 2024, only one of six foreign-based firms that listed their Indian subsidiaries in Mumbai raised new capital. The remaining IPOs were structured entirely as Offer for Sale (OFS) issues, enabling existing shareholders to divest their stakes without injecting new funds into the businesses.

Data from Prime Database indicates that foreign parent companies have amassed nearly $5 billion through these secondary-offering IPOs. Notably, South Korean giants Hyundai Motor and LG Electronics accounted for over 80% of these proceeds. For every dollar raised in these IPOs, more than $59 has flowed out to overseas shareholders.

Planned IPOs Following OFS Route

The trend of OFS-led IPOs appears poised to continue. Walmart-owned PhonePe is planning a $1 billion IPO, while Swedish gaming company Modern Times Group is set to list its Indian unit for $335 million, both expected to follow the OFS route. Coca-Cola has also signaled intentions to sell part of its stake through the upcoming listing of its Indian bottling business. Additionally, banking sources have indicated that Carlsberg’s proposed IPO in India is likely to be structured without raising new capital.

Valuation Premium Driving Listings

High valuations in Indian equity markets are attracting global firms seeking liquidity and enhanced valuations for their parent companies. Prashant Gupta, a partner at Shardul Amarchand, noted that Indian listings provide both liquidity and a positive impact on market capitalization for parent firms. Subsidiaries listed in India often trade at significantly higher valuation multiples compared to their overseas counterparts. For example, Nestle India trades at a price-to-earnings ratio of nearly 77 times, while its Swiss parent trades at around 22 times.

When Hyundai Motor India listed in 2024, its valuation reached approximately $18 billion, accounting for nearly 40% of the parent company’s total market capitalization. LG Electronics India trades at nearly 59 times earnings compared to 44 times for its South Korean parent.

Concerns Over Rupee and Capital Outflows

The rise in OFS-led IPOs coincides with growing concerns regarding pressure on the Indian rupee. The currency has depreciated by 13% against the US dollar since 2024 and by 6% this year alone. Analysts have linked part of this weakness to the repatriation of funds related to IPOs. MUFG Bank noted in January that strong IPO activity has been a significant contributor to the rupee’s decline.

Foreign portfolio investors have sold over $23 billion worth of Indian assets this year, surpassing the previous annual record of $18.9 billion. Tanay Dalal, senior vice president of business and economics research at Axis Bank, stated that IPO-linked capital outflows are exerting a steady depreciation bias on the rupee.

Concerns Over IPO Purpose

India was the world’s second-largest IPO market in 2025, following the United States, with 367 listings raising $21.8 billion, according to LSEG data. Regulatory data shows that a record $26 billion worth of IPOs are currently awaiting approval. However, some policymakers are concerned that IPOs are increasingly being used as exit routes for investors rather than as vehicles for raising growth capital.

India’s chief economic advisor, V Anantha Nageswaran, warned in November that IPOs have “increasingly become exit vehicles for early investors rather than mechanisms for raising long-term capital.” Recent foreign company listings, including those of Carraro, Orkla, and Tenneco Clean Air, were all launched entirely through OFS structures. The only exception was Niva Bupa Health Insurance, which combined fresh fundraising of $84 million with a larger $146 million OFS component.

Observer Voice is the one stop site for National, International news, Sports, Editor’s Choice, Art/culture contents, Quotes and much more. We also cover historical contents. Historical contents includes World History, Indian History, and what happened today. The website also covers Entertainment across the India and World.

Follow Us on Twitter, Instagram, Facebook, & LinkedIn