“IPO activity tends to mirror the secondary market-when performance is strong, more companies list, and when volatility rises, activity moderates. But unlike 2014, when only a handful of IPOs came through, the current market is far deeper and more resilient,” Jacob told ET.
Jefferies has maintained strong momentum in India’s equity capital markets (ECM), executing 16 transactions so far in 2025, led by marquee deals such as the $1.4 billion IPO of HDB Financial Services, Bharti Airtel‘s $1.3 billion and $980 million block trades, a $725 million block trade in Kotak Mahindra Bank, and the $410 million IPO of JSW Cement.
This follows a robust 2024 when the firm executed 42 ECM deals, including the $944 million IPO of Vishal Mega Mart, and the $250 million Sagility IPO.
A key driver of this resilience has been the growing role of domestic investors. Jacbo noted that domestic institutions now contribute 55-60% of anchor book allocations in IPOs, compared to 40-45% from foreign institutional investors (FIIs). It marks a sharp reversal from 5-7 years ago, when FIIs dominated with more than 60%. “This trend will likely continue, reducing reliance on foreign flows,” he said.
Strengthening this shift, market regulator Sebi recently raised the reservation for life insurers and pension funds in IPO anchor tranches from 33% to 40%. “Going forward, we expect the domestic share in IPOs to rise even higher,” Jacob added.He credited both Sebi and the RBI for fortifying India’s capital markets. Sebi, he said, has taken a progressive stance-revisiting rules on issue sizes for large-cap companies, offering more flexibility in raising capital, and adopting artificial intelligence for document processing to cut turnaround times. The RBI, meanwhile, influences market sentiment through its monetary policies.Jacob cited the 50-basis-point rate cut in June, which boosted liquidity and investor confidence, as an example. “RBI’s regulatory framework for financial institutions also ensures stability, making both regulators crucial to market development,” he said.
Another notable trend is the rising share of private equity (PE) portfolio firms going public. “The public market currently offers higher returns compared to private markets,” Jacob said.
PE funds typically target returns of 20-25%, as their investors are willing to accept illiquidity and higher risk in exchange for higher rewards. Public market investors, however, generally look for mid-teen returns of around 15-16%. This divergence has a direct impact on valuations.
Latest data outlines the accelerated momentum in exits. According to a recent EY report, secondary exits and PE-backed IPOs together recorded $35.2 billion and $13.7 billion worth of exits, respectively, in 2025. Yet challenges persist on the foreign investor front. “FIIs’ biggest concern today is the mismatch between growth and valuations,” Jacob said.
While India’s long-term growth story remains compelling, record-low inflation has dampened revenue growth since nominal GDP is no longer lifted simultaneously by prices and volumes. “Some FIIs, though structurally bullish on India, are rotating capital to markets like China, Korea, Hong Kong, and Taiwan where they see more near-term value,” he added.
Looking ahead, Jacob believes artificial intelligence (AI) will serve as an enabler rather than a disruptor.
“Documentation is one area where AI will have a real impact-it can draft as much as 95% of legal documents if given access to data rooms. The legal fraternity will likely adopt it deeply,” he said.
as a Reliable and Trusted News Source
