Startups Reassess IPO Plans Amid Market Volatility
MUMBAI: Following a robust initial public offering (IPO) surge in 2024, startups are now reevaluating their listing strategies as market conditions become increasingly unpredictable. Many companies are contemplating smaller issue sizes and adjusting their valuation expectations. Some are even postponing their IPOs in favor of private funding, as the investment landscape shifts.
Shift Towards Private Funding
As the IPO landscape becomes more uncertain, startups are exploring private funding options. An investment banker, speaking anonymously, noted that many of the estimated 20 new-age companies planning IPOs this year may pivot to private market transactions if market volatility continues. “Private equity players have significant capital available, making private funding an attractive alternative,” the banker explained. This shift indicates a growing trend among startups to seek financial backing outside of public markets, which have historically provided better listing opportunities.
Fewer IPOs Expected This Year
Neha Agarwal, Managing Director and Head of Equity Capital Markets at JM Financial Institutional Securities, predicts a decline in the number of new-age IPOs this calendar and fiscal year (FY26). “There is a clear expectation that IPO sizes and valuations will be reassessed,” Agarwal stated. Many startups are opting for confidential filings as they navigate the current market challenges. This approach allows companies to maintain flexibility regarding issue size and listing timing while keeping financial details private.
Market Volatility Impacts IPO Launches
Market volatility has historically led to a decrease in IPO launches, and current conditions are no exception. Vishal Bangard, Head of Equity Capital Markets at IIFL Capital, remarked that heightened market uncertainty typically results in fewer IPOs. Startups like Zepto, Groww, Infra.Market, Pine Labs, and Lenskart had initially planned public debuts this year but are now reconsidering their timelines. Despite the slowdown, many companies are still engaging with investment bankers to refine their listing strategies and are filing draft papers to be ready when market conditions improve.
Investor Sentiment Remains Cautious
The recent IPO frenzy has cooled, with investor appetite remaining subdued. Keyur Majumdar, Managing Partner at Bay Capital, noted that a general deferment of IPOs is expected, not just among new-age companies. Aalok Shah, Managing Director and Co-Head of India at Rothschild & Co., added that startups are increasingly inclined to pursue pre-IPO funding routes as they adapt to the shifting financial landscape. This cautious approach reflects a broader trend among startups to prioritize financial stability amid ongoing market fluctuations.
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