Secondary deals to drive PE exits as IPO window narrows: Ranu Vohra

Private equity deal-making in India is set for a shift as volatile public markets are likely to limit IPO activity, driving focus on growth and late-stage investments, said Ranu Vohra, co-founder and executive vice chairman of Avendus.

 

Vohra expects deal activity to remain robust, though with a different “complexion” than the IPO-fuelled boom of 2024.

 

“Private equity deal-making in India in 2024 has been around accelerated exits, the IPO market in India which was the best performing in terms of number of IPOs. This year, when there is expected to be a lot of market volatility, it’s hard to repeat what we did in 2024,” said Vohra.

 

According to him, there could be limited windows where IPOs could be possible, bringing back a lot of focus “back to the basics”.

 

Vohra expects deal-making activity to remain strong, with growth and late-stage private equity playing a key role in meeting the funding needs of larger companies. He noted that some firms might opt for private ownership instead of waiting for favourable public market conditions.

 

“I do expect deal-making activity to be strong. It’s just the complexion of it will change from there being largely IPOs to a mix of private and public,” he added.

 

The evolving market conditions are also shaping M&A trends.

 

“Falling markets are useful from an M&A perspective because what happens is that if I am a seller of a business and the market is only going up, waiting sometimes is better,” said Vohra.

 

“In a falling market, the valuations tend to get a little more realistic. I think there are opportunities for M&As where the rationalisation of valuations can lead to more deal activity. It’s also an opportunity for companies to think on how they will find an exit. So a lot of the M&A decisions, consolidation decisions could be driven by that. It compels investors and entrepreneurs alike to think about modes other than IPOs,” he said.

 

Despite changing conditions, Vohra believes India’s strong exit momentum will persist in 2025, though with more secondary deals and equity consolidation.

 

While IPOs could resume if market conditions improve, he noted that investors in recently listed companies are likely to wait for tangible wealth creation before making further moves. He also highlighted the challenges of reallocating capital in the current market, as selling public equities at today’s valuations and shifting to private opportunities is not straightforward.

 

“There’s going to be, in some manner, a slight slowdown when it comes to changing capital allocation. But I would say in the overall scheme of things, given that risk capital in general in India is a very small percentage, the really evolved investors will try and increase their exposure this year,” said Vohra. 

HIS TAKE

 

*  IPO market faces volatility, shifting focus “back to basics”

 

*  Growth and late-stage private equity to meet funding needs

 

*  M&A opportunities rise as valuations become more realistic

 

*  Market conditions may push firms towards private ownership

 

*  Equity consolidation and secondary deals to shape 2025 exits