SEBI Chairman Tuhin Kanta Pandey has clarified that he does not view private equity (PE) firms exiting through initial public offerings (IPOs) as a matter of concern. Speaking to the Economic Times, he said such exits are a natural part of early-stage investing, where risks are high and returns vary significantly across companies.

Contents

PE Exits Don’t Conflict With IPO Market Purpose Investors Free to Reject or Criticise High-Valuation IPOs SEBI Plans ‘Concise Summary’ for Better IPO Disclosure Retail Participation Strengthens Despite FPI Outflows

PE Exits Don’t Conflict With IPO Market Purpose

Pandey noted that investments in new-age companies involve high early-stage risks, and not all bets generate superior returns.
He explained that gains from successful investments offset losses from weaker ones, which is a core principle of private equity strategies.

According to him, there is “no contradiction” between the broader purpose of the primary market and PE firms making partial or full exits through IPOs. These exits, he stressed, are aligned with the functioning of capital markets.

Also Read:Groww Founder Lalit Keshre, a Farmer’s Son, Becomes a Billionaire After Stellar IPO

Investors Free to Reject or Criticise High-Valuation IPOs

Addressing concerns about high valuations in new-age companies, Pandey said SEBI is aware of such issues. However, he emphasised that the decision ultimately lies with investors, who can:

Reject an IPO
Criticise the valuation
Or choose not to participate

The regulator’s role, he said, is not to decide what valuation is correct but to ensure that all material information is available clearly, enabling investors to make informed choices.

SEBI Plans ‘Concise Summary’ for Better IPO Disclosure

Pandey highlighted that SEBI is working on reforms aimed at improving disclosure standards.
The regulator plans to introduce a “concise summary” of all key information related to IPOs, making it easier for investors—especially retail participants—to understand the essentials of the company and the issue structure.

This initiative aims to enhance transparency and provide easier comprehension of critical information that helps investors assess risks before applying for an IPO.

Retail Participation Strengthens Despite FPI Outflows

While foreign portfolio investors (FPIs) have been withdrawing funds from Indian markets, retail investor activity remains robust.
Pandey pointed out that around 100,000 demat accounts are being opened every day, signalling sustained interest from domestic investors despite global uncertainties.

CEA Warns Against Misplaced Market Celebrations

In the broader market context, India’s Chief Economic Adviser V. Anantha Nageswaran recently cautioned against celebrating what he called “wrong milestones”, such as rising market capitalisation ratios or increased derivatives trading volumes.

On November 17, Nageswaran also expressed concern over investors increasingly using IPOs as exit routes, arguing that such practices undermine the “spirit of public markets.”

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