Secondary share sales continue to dominate IPOs with 80% of proceeds

While such a sale provides exits to PE investors and encourages promoters to list, it only results in change of equity ownership and doesn't really create new manufacturing or service capacity

Secondary share sales continue to dominate the initial public offering (IPO) market, with the share of such sales in the total IPO proceeds coming in at above 80 per cent for the third straight financial year (FY20).

In fact, the pie of secondary share sales has grown every year since FY15, from 41 per cent to 88 per cent for the just concluded financial year.

A high share of secondary sales isn’t a negative as it provides exits to private equity (PE) investors, thus freeing up capital to be invested in newer companies. It also helps promoters liquidate some of their holdings,