India’s red-hot initial public offering market may look irresistible as foreign firms
line up for listings, but the rush is not about raising funds to
expand in a fast-growing market; it’s about sending billions of
dollars back to headquarters.
Just one of six foreign-based companies that listed their
Indian units in Mumbai since 2024 raised new funds, with all
others structured purely as secondary offerings – or offer for
sale (OFS), where existing shareholders sell their holdings to
the public without raising any new funds, according to data from
Prime Database, an Indian market research firm.
Foreign-based parents of companies that have long invested
in India pocketed nearly $5 billion through such
secondary-offering IPOs, with Hyundai Motor and LG
Electronics accounting for more than 80% of those
payouts, the data showed. Simply put, for each dollar raised in
these IPOs taken together, more than $59 went out.
And the trend is continuing: the planned $1 billion IPO of
Walmart’s Indian payments arm and Modern Times Group’s
$335 million IPO of its local gaming unit will both
take the OFS route.
This week, Coca-Cola said the planned listing of its
Indian bottler will have the American firm sell a portion of its
stake. Banking sources said Carlsberg’s planned
Indian IPO will also have no new funds raised – it will also be
an OFS.
The trend, which bankers and economists say is a result of
sky-high stock valuations in India in recent years, shows that
the prospect of a lucrative partial exit from Indian investments
has become more attractive to many foreign companies than
raising new funds to expand.
Global companies are pursuing “India listings as this
provides them liquidity as well as a positive impact on the
market cap for their parent,” said Prashant Gupta, a partner at
law firm Shardul Amarchand, which advised both Hyundai and LG on
their OFS-structured IPOs.
Modern Times declined to comment, while Carlsberg said it is
“exploring different options for increasing shareholder value
which may potentially include an” Indian IPO.
Walmart’s Indian unit, PhonePe, Hyundai, LG and other
companies did not respond to Reuters requests for comment.
RUPEE WOES
The OFS trend comes at a troubling time for the Indian
rupee, which has fallen 13% against the U.S. dollar since 2024
and 6% so far this year. That has raised concerns that the
IPO-linked repatriations are compounding already heavy foreign
capital outflows.
In January, MUFG Bank wrote that its analysis “shows one
important contributor to Indian rupee weakness has been the
strong IPO market in India.”
So far this year, foreign portfolio investors have sold more
than $23 billion of their holdings, surpassing 2025’s record
outflows of $18.9 billion.
IPO-linked capital outflows are “exerting a steady, though
not abrupt, depreciation bias on the rupee,” said Tanay Dalal, a
senior vice president of business and economics research at Axis
Bank.
Government officials and regulators have not indicated that
they would try to curb the OFS trend, though India’s Chief
Economic Advisor V Anantha Nageswaran warned in November that
IPOs had “increasingly become exit vehicles for early investors
rather than mechanisms for raising long-term capital.”
“This undermines the spirit of public markets,” he said. He
did not respond to Reuters queries.
THE VALUATIONS GAME
India was the world’s second-largest IPO market in 2025
after the U.S., with 367 listings raising $21.8 billion,
according to LSEG data. Its markets surged to record highs over
the last two years before starting to struggle this year due to
uncertainties related to the U.S.-Israeli war on Iran.
Still, a record $26 billion worth of IPOs are awaiting
approvals, according to regulatory data.
The appeal for using the OFS route is rooted in valuations.
Indian-listed units of foreign firms have consistently
traded at multiples that dwarf their parents. Add to that a
growing group of domestic investors that has resulted in high
valuations in India over the past two years, making local
listings attractive, lawyers and bankers said.
At least six foreign companies that listed their Indian
units in recent years trade at a significant premium to their
overseas parents, according to LSEG data.
Nestle India, which listed in 1969, has a price-to-earnings
ratio – a measure of stock valuations relative to profit – of
nearly 77 times, versus 22 times for Swiss parent Nestle
. LG Electronics India, which listed last
year, trades at nearly 59 times versus 44 times for its South
Korean parent, LG Electronics.
On the day Hyundai listed its Indian unit in
2024, it was valued at about $18 billion, roughly 40% of its
parent’s market capitalisation.
“What’s driving this is smart capital allocation – asset
owners capitalizing on cross-market valuation arbitrage,” said
Abhishek Gang, a director at U.S.-based investment bank Houlihan
Lokey.
Since 2024, the IPOs of the Indian units of Italian
transmission systems maker Carraro, Norwegian consumer
goods group Orkla, and American auto parts maker
Tenneco Clean Air all had OFS structures.
Only one – Britain-based Bupa’s India unit, Niva Bupa Health
Insurance – structured its local IPO as a mix of fresh
fundraising of $84 million and a larger $146 million OFS
component.
“The final structure balanced the company’s capital
requirements with shareholder objectives, with the fresh capital
supporting growth plans and the OFS providing partial liquidity
to existing investors,” Niva Bupa said in a statement to
Reuters.