OFS share in IPOs hits 3-year high as promoters cash in on high valuations

Fundraising through mainboard initial public offerings (IPOs) climbed to ₹61,500 crore in the first seven months of 2025, marking a 70% rise from ₹36,343 crore raised during the same period last year, despite global trade headwinds, geopolitical tensions, and macroeconomic challenges. However, the number of IPOs edged down to 37 from 40 a year earlier, indicating a rise in the average issue size, according to data from Prime Database.

Offer for Sale (OFS), where promoters or early investors divest their holdings, continues to dominate India’s IPO market, though the share of fresh equity capital has been steadily improving in recent years. Proceeds from fresh equity is typically used for expansion, deleveraging, or acquisitions, while OFS proceeds go directly to selling shareholders without strengthening the company’s balance sheet.

Data from Prime Database showed that out of ₹52,213 crore mobilised through 28 IPOs so far in 2025 (till July 29), nearly two-thirds or ₹33,016 crore came from OFS, while fresh capital accounted for ₹19,197 crore.

Data reveals that promoters and private equity investors have consistently preferred OFS as a tool to monetise their holdings, accounting for the bulk of IPO proceeds. It shows that between 2020 and 2025, IPOs garnered over ₹4.66 lakh crore, of which nearly two-thirds came through OFS.

“There’s often a perception that OFS is a bad thing because the money goes to promoters or early investors. But I don’t subscribe to that. What we’re seeing today is actually the evolution of India’s capital market ecosystem- where angel investors, VCs, and PE funds provide the early risk capital,” said Pranav Haldea, managing director of Delhi-based Prime Database Group.

“Once companies mature and also establish governance, they come to the IPO market. It’s only fair these early investors get a chance to exit and return money to their investors. Only then will they be able to raise more money to invest in the next set of companies,” he added.

In 2024, when IPO fundraising soared to a five-year high of ₹1.60 lakh crore, OFS remained strong at ₹95,285 crore. The fresh equity accounted for ₹64,499 crore, the highest since 2020, indicating that more companies were turning to the markets for capital-raising needs such as capacity expansion, debt reduction, and acquisitions.

“The trend of OFS component increasing in IPOs this year is quite prominent. OFS as percentage of total issue amount has hit a 3-year high of 63.2% so far this year,” said Anil Sharma, Co-Founder, IPOCentral.

Among the major factors contributing to this trend is the acceptance of high valuations among investors which is leading investors to offload their shares in bigger quantities. It is also a matter of timing among private equity investors as they understand that deleveraged corporate balance sheets are not going to remain same in the coming years, he explained.

“Overall, I think it is a natural phenomenon that we have observed playing out in cycles. I wouldn't be the one to sound alarm bells on this trend yet,” he added.

With robust liquidity, improving corporate fundamentals, and positive policy cues, experts expect the IPO market to witness a healthier mix of fresh fund-raising alongside promoter exits in the coming years.