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Foreign companies are progressively utilizing India’s booming archetypal nationalist offering (IPO) marketplace to currency retired investments and nonstop billions of dollars backmost to their location countries alternatively than rise caller superior for expansion, according to a Reuters analysis.As per the report, lone 1 of the six foreign-based companies that listed their Indian subsidiaries successful Mumbai since 2024 raised caller funds. The remaining IPOs were structured wholly arsenic Offer for Sale (OFS) issues, allowing existing shareholders to merchantability their stakes without bringing caller superior into the business.Data from Prime Database showed overseas genitor companies person pocketed astir $5 cardinal done specified secondary-offering IPOs.South Korean giants Hyundai Motor and LG Electronics accounted for much than 80 per cent of those proceeds.For each dollar raised successful these IPOs collectively, much than $59 flowed retired to overseas shareholders.The inclination appears acceptable to continue. The planned $1 cardinal IPO of Walmart-owned PhonePe and Swedish gaming institution Modern Times Group’s projected $335 cardinal listing of its Indian portion are some expected to travel the OFS route.
Coca-Cola has besides indicated that it volition merchantability portion of its involvement done the planned listing of its Indian bottling business, portion banking sources cited by Reuters said that Carlsberg’s projected India IPO is besides apt to beryllium structured without raising caller capital.
Valuation premium driving listings
Bankers and ineligible experts said that precocious valuations successful Indian equity markets are making section listings charismatic for planetary firms seeking liquidity and a valuation boost for genitor companies.“India listings supply liquidity arsenic good arsenic a affirmative interaction connected the marketplace headdress for their parent,” Prashant Gupta, spouse astatine instrumentality steadfast Shardul Amarchand, which advised Hyundai and LG connected their IPOs, told Reuters.Indian-listed subsidiaries of overseas companies often commercialized astatine importantly higher valuation multiples than their overseas parents.Nestle India, for instance, trades astatine a price-to-earnings ratio of astir 77 times compared with astir 22 times for its Swiss parent.LG Electronics India trades astatine astir 59 times net versus 44 times for its South Korean parent.When Hyundai Motor India listed successful 2024, the subsidiary was valued astatine astir $18 billion, astir 40 per cent of the genitor company’s full marketplace capitalisation.
Concerns implicit rupee and superior outflows
The increasing usage of OFS-led IPOs comes amid concerns implicit unit connected the Indian rupee.The currency has fallen 13 per cent against the US dollar since 2024 and 6 per cent truthful acold this year.Analysts person linked portion of the weakness to IPO-related repatriation of funds. MUFG Bank said successful January that beardown IPO enactment had been “one important contributor” to rupee weakness.Foreign portfolio investors person already sold much than $23 cardinal worthy of Indian assets this year, exceeding the erstwhile yearly grounds of $18.9 billion.“IPO-linked superior outflows are exerting a steady, though not abrupt, depreciation bias connected the rupee,” Tanay Dalal, elder vice president of concern and economics probe astatine Axis Bank, said, arsenic cited by Reuters.
Concerns implicit IPO purpose
India was the world’s second-largest IPO marketplace successful 2025 aft the United States, with 367 listings raising $21.8 billion, according to LSEG data.Regulatory information besides amusement that a grounds $26 cardinal worthy of IPOs are awaiting approval.However, immoderate policymakers person expressed interest that IPOs are progressively being utilized arsenic exit routes for investors alternatively than vehicles for raising maturation capital.India’s main economical advisor V Anantha Nageswaran warned successful November that IPOs had “increasingly go exit vehicles for aboriginal investors alternatively than mechanisms for raising semipermanent capital”.Among caller foreign-company listings, the Indian units of Carraro, Orkla and Tenneco Clean Air were each launched wholly done OFS structures.The lone objection was Niva Bupa Health Insurance, whose IPO combined caller fundraising of $84 cardinal with a larger $146 cardinal OFS component.“The last operation balanced the company’s superior requirements with shareholder objectives, with the caller superior supporting maturation plans and the OFS providing partial liquidity to existing investors,” Niva Bupa said successful a statement.
