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IPOs Fund Growth: Capex Surges, Exits Slow
8 Dec
Summary
- IPO money for new projects and machinery nearly doubled this year.
- Exiting investors and promoters still receive over 60% of IPO funds.
- Companies increasingly fund growth organically, not via acquisitions.
Fresh issuances in 2025 show a notable trend: approximately 20% of capital raised from initial public offerings (IPOs) is now earmarked for new projects, plant, and machinery, a substantial increase from just 8% in the previous year. This renewed focus on capital expenditure (capex) aligns with government calls for private sector investment.
However, the analysis reveals that despite this investment in expansion, a significant portion of IPO proceeds, over 60%, still goes to promoters and exiting shareholders. This trend reflects a strong private market exit cycle. Companies are increasingly prioritizing organic growth, with acquisition outlays significantly decreasing.
This reallocation of funds towards expansion signifies a move towards more efficient use of public money. While capex allocations have nearly tripled, a substantial portion is for upgrading existing assets. Nevertheless, new project expansions are gaining momentum, signaling a potential revival in new capacity addition across various sectors.
