India IPOs: Foreign Firms Cash Out, Not Expand

India's initial public offering (IPO) market, the world's second-largest in 2025 after the U.S., is now predominantly used by foreign entities to divest their Indian holdings rather than secure funds for growth.

Since 2024, six foreign-owned companies have listed their Indian operations, with only one raising fresh capital. The majority of these IPOs were structured as offers for sale (OFS), enabling existing shareholders to sell stakes. This has resulted in nearly $5 billion flowing out of India to overseas investors.

This trend is driven by India's high market valuations, which often exceed those of parent companies abroad. For instance, Nestle India trades at significantly higher multiples than its Swiss parent. This valuation arbitrage, coupled with the need for liquidity for parent firms, fuels the OFS-led IPO strategy.

Concerns have arisen regarding the pressure this outflow exerts on the Indian rupee, which has weakened against the U.S. dollar. Some analyses suggest India's robust IPO market has contributed to this currency weakness, highlighting the financial implications of this divestment strategy.