IPOs Turning Into Exit Routes for Investors, Not Growth Tools, Warns CEA Nageswaran
CEA warns India’s IPO market is leaning toward early investor exits rather than true capital raising.
India’s Chief Economic Advisor V Anantha Nageswaran has raised concerns that the country’s booming IPO market is increasingly functioning as an exit route for early investors rather than a platform for genuine capital raising. Speaking at the CII Financing Summit on Monday, the CEA said this trend risks undermining the foundational purpose of public markets as vehicles for growth-oriented funding.
“India's equity markets have grown impressively, but initial public offerings have increasingly become exit vehicles for early investors rather than mechanisms for raising long-term capital. This undermines the spirit of public markets,” Nageswaran said. He urged market participants to focus on building depth and purpose in India’s financial ecosystem rather than celebrating scale alone.
According to a PTI report, 55 Indian companies launched IPOs between April and September 2025, raising close to Rs 65,000 crore. However, a large portion of these issues were offer-for-sale (OFS) transactions — where existing shareholders divest their stakes — rather than fresh equity issuances that inject capital directly into the company. Nageswaran argued that such patterns shift the focus from growth funding to wealth extraction, diluting the broader developmental role of capital markets.
Also Read: Tesla Q3 Profit Plunges 37% Despite Record Sales as Tariffs and Costs Bite
The CEA also warned against what he called “celebrating the wrong milestones,” such as market capitalisation growth and high levels of derivatives trading, which he said do not reflect true financial sophistication. Overemphasis on these metrics, he noted, could divert domestic savings from productive investments and encourage short-term decision-making based on superficial market indicators.
Highlighting the need for stronger structural reforms, Nageswaran called for accelerated development of India’s bond market to reduce dependence on bank credit for long-term funding. “Developing a deep bond market is a strategic necessity,” he added, stressing that India must foster ambition, risk-taking, and durable investment to enhance its strategic economic resilience. As India aims to become one of the world’s major economies, he said, true financial maturity will come from aligning growth with stability, not speculation.
Also Read: Russia Plans to Produce 120,000 Glide Bombs in 2025, Warns Ukrainian Intelligence
