IPO Secondary Sales Hit Record ₹1 Trillion; A Healthy Sign?
Investors are witnessing the Indian secondary market structurally redefining how capital is raised in Dalal Street. Funds raised through the OFS (Offer For Sale) component of IPOs (Initial Public Offerings) have zoomed to a new all-time high of close to ₹96,000 cr in calendar year 2025. This is already over-shadowing last year’s record of ₹95,285 cr. This figure is rapidly moving towards the psychological ₹1 trillion mark with six weeks still left in the year.
But the picture of new share issuances is quite a contrast. Fresh capital raised via new share issuances stand at ₹56,796 cr. Thus, it is pale in comparison to the OFS tally. Since 2015, nearly three-fourths or around 66% of all IPO fundraising has been in the form of OFS (~₹4.73 trillion). However, merely ₹2.44 trillion has come from primary issuance.
This trend is particularly visible in new-age IPOs like Lenskart, Groww, and Pine Labs, where early investors have booked huge profits. As the secondary sales is dominating the narrative, this divergence has reignited a fierce debate among investors. Are IPOs becoming mere exit doors for private equity (PE) funds? Or, is this a sign of a mature market rewarding cash-generating businesses?
Is the "Exit Route" Narrative Fair?
The dominance of OFS most notably has drawn criticism from Chief Economic Advisor V Anantha Nageswaran. Recently, he observed that IPOs are increasingly becoming "exit routes for early investors rather than vehicles for long-term capital formation." This is a trend that could potentially undermine the core purpose of public markets.
The fresh capital is going into the company for capex and expansion. It can signal economic vitality. However, the OFS money would go directly into the pockets of selling shareholders.
There are contrasting views too on this narrative. Companies might have already raised their primary growth capital in private markets. Now, they could be listing primarily to provide liquidity to those early backers. Today's OFS-heavy IPOs can involve mature, cash-generating companies that have achieved scale and governance maturity. They simply may not need more primary capital.
Experts point out that VCs and PEs might now provide the risk capital. This might be a reflection of the evolution of Western markets. Therefore, if the companies are mature and profitable, does it really matter to the new shareholder where the IPO money goes?
The FPI Paradox: Selling Stocks, Buying IPOs
Apart from the OFS debate, another fascinating trend is playing out with FPIs (Foreign Portfolio Investors). The FPIs are behaving like fussy diners at a buffet. They seem to be skipping the main course (secondary market) but lining up for the fresh starters (IPOs).
FPIs have sold ₹13,925 cr in the secondary market (by Nov 14). With this, their year-to-date sell-off has reached a peak of ₹2,08,126 cr. But the story does not end here. The FPIs have simultaneously pumped ₹7,833 cr into primary market IPOs in Nov 2025. Thus, their total IPO investment in 2025 has reached ₹62,125 cr.
But why does this contradiction exist? Analysts are suggesting:
- FIIs could be finding the secondary market expensive due to high valuations and tepid earnings growth.
- They are rotating capital into cheaper, AI-driven markets like the US, China, and South Korea.
- But clearly, they still believe in the India story enough to buy into new listings at IPO valuations.
This might be perceived as a move of leaving some money on the table.
A Market in Transition
The Indian market is currently navigating a complex transition.
-
The Nifty50 is stuck in a consolidation phase, struggling to break out of the 25,750–26,050 range.
-
But the IPO market is in a "frenzy." The primary market is absorbing mega-issues without breaking a sweat. The new T+3 listing cycle that can churn liquidity faster is aiding the IPO rush.
Investors can look at the rise of OFS as a characteristic of a market where value creation has shifted to the private stage. The retail investors can look beyond the "OFS vs. Fresh Issue" label and focus on the business fundamentals. If a company is solid, an OFS can simply be a change of guard. But if the business is weak, even a fresh issue might not be able to save it.
We are heading into the final weeks of 2025. So, will the primary market's euphoria eventually lift the secondary market? Or, will the valuation gap finally snap the IPO streak?
Source
This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read the full disclaimer here.
Investments in securities market are subject to market risks, read all the related documents carefully before investing. Brokerage will not exceed SEBI prescribed limit. The securities are quoted as an example and not as a recommendation. SEBI Registration No-INZ000200137 Member Id NSE-08081; BSE-673; MSE-1024, MCX-56285, NCDEX-1262.