India’s booming primary market has delivered extraordinary liquidity to company promoters and early investors, with Offer for Sale (OFS) accounting for nearly two-thirds of all IPO fundraising in the last five years. Market data shows this surge in secondary share sales is not a distortion but rather a sign of a maturing, deeper capital-market ecosystem.

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Why Are OFS Volumes So High?OFS Trend Reflects a Mature Market, Not a Red Flag Liquidity Is the Backbone of India’s Primary Market Boom Is Too Much OFS a Concern? Experts Say No

Between 2021 and 2025, Indian companies raised Rs 5.4 lakh crore ($60.4 billion) through IPOs. Of this, a massive Rs 3.37 lakh crore ($37.7 billion) came from OFS exits, where existing shareholders — including promoters, venture capital investors, private equity funds, and early backers — offloaded part of their stake.

In contrast, fresh issue proceeds stood at Rs 2.03 lakh crore ($22.7 billion), accounting for just 60% of OFS volumes. This shift reflects a structural change in how companies raise money and how investors realise value in India’s capital markets.

Why Are OFS Volumes So High?

A significant portion of the recent IPO wave has come from technology companies, VC-backed businesses, multinationals, and private-equity-owned firms seeking to monetise investments. Many of these businesses operate on digital-first, asset-light models, meaning they do not require heavy capital expenditure, reducing the need for large fresh issues.

“A large share of companies tapping the IPO market today belong to new-age business models with strong moats,” said Kranthi Bathini of WealthMills Securities. These companies are entering the markets primarily to provide exits to early investors, not to raise new capital.

Bathini added that the current investment cycle is prompting early investors to cash out. “In a capitalist system, everyone wants the best price for their investment, and today’s liquidity-driven markets provide that opportunity,” he noted.

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OFS Trend Reflects a Mature Market, Not a Red Flag

While large OFS components sometimes raise eyebrows among retail investors, industry experts argue that this trend highlights India’s financial evolution.

Pranav Haldea, Managing Director at Prime Database, said the dominance of OFS is a hallmark of a maturing capital-market ecosystem. Historically, IPOs raised large amounts of “risk capital” before business models were proven. Today, that risk is absorbed earlier by angels and venture capital firms.

“Only companies that reach a certain size, scale and governance standard now come to the IPO market. That is a much healthier evolution,” Haldea explained.

He also noted that fresh capital often goes toward debt reduction rather than business expansion, so comparing fresh issue vs OFS is not always useful. Prime Database’s decade-long study even shows pure OFS IPOs outperforming pure fresh-issue IPOs on average.

Liquidity Is the Backbone of India’s Primary Market Boom

Analysts emphasise that the surge in OFS fundraising is driven fundamentally by the strong liquidity environment and the structural shift in domestic savings towards equities.

Bathini highlighted that India is witnessing a digitalisation of household savings, with more investors choosing equity markets over physical assets. This robust liquidity ensures strong demand for IPOs, regardless of whether the funds raised go to companies or exiting shareholders.

“As long as liquidity remains strong, more business models will continue to tap the public markets,” he said.

Is Too Much OFS a Concern? Experts Say No

Despite recurring debates around promoter or PE-led profit booking, market experts insist the focus should be on the quality of the company and its valuation, not the proportion of fresh issue versus OFS.

Haldea said, “The constant focus on OFS is misplaced. What matters is whether the company is good and the valuation is reasonable.”

Bottom Line

With two-thirds of IPO money going toward shareholder exits, India’s capital markets are witnessing a clear shift in how wealth is created and realised. The surge in OFS proceeds reflects:

a deepening investor base,
a healthier IPO ecosystem,
strong liquidity, and
maturing capital-market behaviour.

As long as liquidity stays strong and retail participation grows, companies — whether raising funds or enabling exits — will continue to tap the IPO market at scale.

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