India’s IPO boom becomes a cash-out route for foreign firms

Foreign-linked companies are tapping India’s red-hot IPO market less as a source of growth capital than as a cash-out lane. Of the six foreign-based firms that listed Indian units in Mumbai since 2024, only one raised new funds; the other five were pure offer-for-sale deals, leaving the operating businesses with no fresh money while existing shareholders sold into strong local demand.

Data compiled by Prime Database show the scale of the shift. Foreign-based parents have pocketed nearly $5 billion through these secondary-offering IPOs since 2024, with Hyundai Motor and LG Electronics accounting for more than 80% of those payouts. Put differently, more than $59 has gone out for every $1 raised in these offerings. That ratio captures why the boom is troubling some market watchers: India’s valuations and depth of retail and institutional demand are helping global owners monetize stakes, but the money is not staying in the companies that are listing.

The pattern is already visible in the largest deals. Hyundai Motor India’s Mumbai debut in October 2024 was a pure offer for sale of 14.22 crore shares worth Rs 27,870.16 crore. LG Electronics India followed the same playbook, with the Korean parent selling 10.18 crore shares and the Indian subsidiary receiving no proceeds. Those transactions showed how a premium listing in India can deliver an exit at scale for a foreign parent without expanding the local balance sheet.

The pipeline suggests the trend is not fading. Walmart’s Indian payments arm is planning a roughly $1 billion IPO through the offer-for-sale route, Modern Times Group’s Indian gaming unit is lining up a $335 million listing on the same basis, and Coca-Cola’s planned Indian bottler float will involve the American parent selling part of its stake. Banking sources say Carlsberg’s planned Indian IPO is also set to be a pure OFS. For Indian investors, that means the fine print matters as much as the brand name: a hot debut can mask the fact that no new capital is being deployed in India.

That raises a policy question for the Reserve Bank of India and market regulators. If more of these proceeds are repatriated abroad, the effect could be more than symbolic, adding to pressure on the rupee even as India remains one of the world’s most active IPO markets. The challenge is to distinguish genuine India growth stories from listings that mainly recycle capital out of the country, because a crowded IPO calendar can still be a capital drain if the money does not help finance expansion at home.