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SUMMARY
The wave of startup IPOs has unlocked new insights for private equity investors in their quest to find exits in the Indian market
Exits in India are largely going to come from a very vibrant public market, according to Norwest MD Niren Shah
Oman India Joint Investment Fund CEO Srinath Srinivasan believes that disciplined exit timing is vital for PE investors
For India’s private equity ecosystem, the wave of startup IPOs has unlocked new insights into the Indian market and in many cases vindicated belief in Indian startups even when the tide was not in their favour. And now they are reaping the rewards through exits.
As many as 13 new-age tech startups made it to the public markets in 2024, cumulatively raising over INR 29K Cr ($3.4 Bn). And in 2025, this number is expected to double with at least 23 new-age tech startups eyeing a public listing, and looking to raise more than INR 55K Cr ($6.4 Bn) cumulatively.
As predicted in the beginning of the year, the general elections in 2024 played a pivotal role in the IPO numbers. In fact, in the startup ecosystem, only five startups got listed before the elections while the rest hit the market once there was more stability post the election results. In 2025, while no such major events are due, ongoing macroeconomic uncertainties like GDP downfall might make the public market volatile from time to time.
Of course, there are cycles of up and down, and while currently, we are in the throes of a bearish market, that has not shaken the faith of private equity investors on exits from the Indian market. Given that India has not been a great M&A market, the IPO wave is the biggest source of exits for many PE investors.
The list of IPO-bound companies includes Ather Energy, BlueStone, CarDekho, CaptainFresh, Ecom Express, Fractal, Infra Market, IndiQube, ArisInfra, Innoviti, OfBusiness, Ola Consumer, Pure EV, Physics Wallah, Ullu, Smartworks, among several others.
Exits Galore In India For PE Funds
According to IVCA-EY data, PE/VC exits in 2024 were at $26.7 Bn across 282 exits, a 7% growth YoY in value terms. Plus, in 2024, PE-backed IPOs recorded the highest growth of 130% YoY in value and 33% higher in the number of deals.
“Exits in India are largely going to come from a very vibrant public market,” Niren Shah, managing director and head of India at PE fund Norwest Venture Partners, said on the sidelines of the IVCA Conclave in Mumbai earlier this month
For Shah and other PE fund managers, there has been a noticeable strategic shift: “The market is getting deeper and more vibrant, so our entire strategy changed around 2017 to find those companies which are IPO-able,” the Norwest MD said adding that seven more IPOs are planned from its portfolio over the next two years, after eight Norwest-backed companies listed on the public markets.
Echoing this bullish sentiment, PE fund Iron Pillar partner Mohanjit Jolly added, “Our companies are making the most of this moment by going public. When we think about US entities, the IPO market is shut. And the other thing is, you have to be a $400-500 Mn in ARR and a profitable entity to finally list on NASDAQ. This is not the case in India“
Shah also emphasised the contrast between the Indian and US stock markets, even though in recent days the tide of foreign investors and PEs has turned towards the US.
Discipline In Exits
Oman India Joint Investment Fund CEO Srinath Srinivasan said in a session at the IVCA Conclave that disciplined exit timing is vital for PE investors. “One thing we have done right is to take money off the table without waiting forever. It is a discipline. You will come under criticism from all quarters, but I think it’s a good discipline to have,” Srinivasan, whose firm has seen seven exits between 2023 and 2024, added.
The Norwest MD added that India has not produced the IP technology that gives long-term value even if the company is not able to list. Large M&A opportunities are simply not the norm in India. This means PE investors have to turn to the public markets for the exit outcomes. “You don’t get the Googles coming and paying a couple of billion dollars. In the US, even if a company in the startup world doesn’t do too well, somebody might pay $200 Mn or $500 Mn. It doesn’t happen in India,”
Lightspeed India managing director Anuj Bhargava believes that the public markets trends of 2024 will continue well into 2025 and the momentum is expected to be strong. “Though we have seen some recent softening, which was expected, fundamentally, nothing has changed. Domestic capital inflows remain strong and are getting stronger. While foreign investment inflows have been sporadic, I think that was also expected. And the market today is held together, in large parts, by domestic institutions, which was not the case a couple of years ago,” said Bhargava.
But PE investors still have to work with startups in India to manage outcomes to get the best exits.
While a number of companies are lining up for IPOs, profitability is still elusive for many. Even those with profitable models such as Zomato have seen some pressure in terms of investor selloff thanks to competitive pressures.
“Very early, we bring in independent board members, start rolling out the IPO piece very early on. The market size needs to be large enough because public companies can’t be like $600 Mn. You want to make sure you IPO around the billion-dollar mark if you want some liquidity,” Norwest’s Shah added.
And when it comes to market volatility, Shah said that there is always the possibility of some automatic discounting during the IPO. “If the market drops 20% (turns bearish), that’s still business as usual. Maybe under negative extreme periods, you will not be able to go for an IPO, but in most times, if you build solid companies, you will be able to go out at a reasonable price.”
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