IPO fundraising in 2021-25 crosses that of 2001-20, marking a milestone

Avg Return of IPOs from 2021-25 at 63%

The Indian capital markets are witnessing an epochal moment: capital raised via IPOs in the last five years (2021 to 2025 year to date) has crossed that raised in the 20 years prior (2001–2020). The growth in fundraising through IPOs (₹4 trillion raised in the last 4.5 years) has been driven by growing investor participation—both retail and institutional.

 

The heft of institutional investors has been driven by domestic institutional investors such as mutual funds (MFs), which are currently managing assets of over ₹74.4 trillion. Equity-oriented schemes account for over 60% of these total assets under management. What’s more, ₹27,000 crore comes every month by way of Systematic Investment Plan (SIP) contributions, driving further demand for new investable ideas that IPOs bring.

 

On the supply side, we have been witnessing very high-quality businesses from across the country and from varying sectors tapping the IPO market to fund investments in differentiated high-growth businesses or to monetise and list the companies to recycle capital to drive further economic growth and create wealth for investors.

 

The IPOs of the past 4.5 years have been a value creation platform for all stakeholders—institutional investors, HNIs, retail investors, employee/management shareholders of the companies, private equity investors, and the promoters themselves. The proof point is simple: IPOs floated from January 2021 till date have provided an average return of over 63% (current market prices vs IPO price), showing that not just the pre-IPO shareholders but also new ones have benefited in a classic win-win situation.

 

Based on the current trends and the overall macro story of India—growth, governance, regulations, and opportunity—I believe that the next three years (i.e., at least until 2028) will be the golden era of fundraising in the Indian capital markets. At Equirus, we estimate that the fundraising in the next three years will exceed that of the last five by over 50%. The ₹6 trillion of productive capital being raised over the next three years will set off a virtuous cycle of generating good returns for existing investors, attracting further investments from households and global capital chasing returns, and will democratise entrepreneurship, removing capital as a constraint for India Inc to prove its might on the global stage.

 

Unlisted corporates must take advantage of this golden era of fundraising to raise risk capital to double down on growth. Those enterprises that fail to do so will risk getting left behind by well-funded competitors who can invest in innovation and attract talent by giving them stock options.

 

This is not an empty hypothesis. One can draw parallels from the world’s largest and deepest capital market, the US. In the USA, between 2016 and 2021, $350 billion was raised via IPOs. Of this, a peak sum of $138 billion was raised in calendar year 2021 through 381 IPOs. Thereafter, the golden period ended, and fundraising nosedived. Calendar years 2022–2023 combined saw a fund raise of just 196 IPOs, raising about $27 billion.

 

Faced with unfavourable market conditions, many firms postponed staying private longer (e.g., CoreWeave, Klarna, StubHub) but at the cost of missing peak valuations and public funding access. Case in point: Affirm Holdings, which chose to make an IPO debut in January 2021. The company’s valuation has more than doubled—from $12 billion to $30 billion now. On the contrary, Klarna, which hit a valuation of $45.6 billion, did not—or wasn’t able to—do an IPO, and saw its valuation crash to $6.5 billion.

 

Another example is Instacart, which hit a private valuation of $39 billion in March 2021. Instacart too postponed its 2022 filing, eventually going public in 2023 at a much lower $9.3 billion valuation. Post-listing, however, the company’s valuation zoomed above $14 billion. DoorDash, which went public at a $39 billion IPO valuation in 2020, was valued 91% higher on listing at more than $72 billion.

 

The cost of not doing an IPO, apart from the loss in valuations, is also losing out on the crucial equity funds that allow companies to grow. This hurts even more if competitors raise funds and get the equity needed to grow their businesses. Over-reliance on debt can skew the capital structure of the business, leading to more leverage and interest costs. Missed liquidity events diminish employee morale—stock options lose meaning.

 

Early investors (PE/VC) pressured to exit within 7–10 years need a timely public path. Delays can lead to strained relationships, down rounds, or forced M&A. Competitors who list earlier gain brand visibility, access to capital, and higher valuations. Latecomers may face tougher valuations in stale markets—and heightened scrutiny.

 

India is in the midst of a rare IPO prime-time—driven by economic stability, investor appetite, regulatory support, and huge foreign capital inflows. As history shows—from the U.S. IPO hangover post-2021—missing a public window can cripple growth and delay expansion by years.

 

For India’s next-generation unicorns, the 2025–2028 window is a once-in-a-decade opportunity. Companies should move now lest they risk being locked out of the bright future that beckons those who act now.

 

The author is Managing Director & Head of Investment Banking, Equirus Capital

 

Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper.