Private equity and VC players make a killing as IPO rush yields them ₹10,000 crore

• Private equity and venture capital firms exited 17 companies via IPOs in 2023, amounting to ₹10,007 crore.
• PE/VCs sold stakes in Delhivery, Zomato and Paytm PE/VCs this year via block deals.
• Open market exits accounted for 57% of all exits by value in August, says a report by IVCA-E&Y.
• Experts say that more exits via open markets is a sign of maturity in the ecosystem.

The great rush for initial public offerings (IPOs) has landed a bounty of massive proportions for entrepreneurs and investors alike. And a fourth of all the funds raised, and almost half of all the offer-for-sale capital landed in the coffers of private equity and venture capital firms. This is in addition to the large block deal action seen between August and September, especially in new-age companies.

A total of ₹40,773 crore was raised by 46 mainboard public offers in 2023 up until the third week of November. Around half of it — ₹23,714 crore raised as offers-for-sale by promoters, existing investors and more. Of this, PE and VC players made as much as ₹10,007 crore across 17 IPOs via offers-for-sale, according to data by Primedatabase.

Mainboard IPOs in 2023

Total issue amount	₹40,773 crore
Offers for sale	₹23,714 crore
Fresh Capital	₹17,059 crore
PE/VC exits	₹10,007 crore

Source: Primedatabase

This year’s largest IPO of Mankind Pharma saw the chunkiest of PE/VC exits amounting to ₹3,244 crore. A few large IPOs like Concord Biotech, R R Kabel and one of India’s most-awaited issues, Tata Technologies saw large PE/VC sell-offs.

Company	PE/VCs exited	Amount
Mankind Pharma	Beige, Cairnhill CGPE, Cairnhill CIPEF and Link Investment Trust	₹3,244 crore
Concord Biotech	Helix Investment Holdings	₹1,550 crore
R R Kabel	TPG Asia VII SF	₹1,334 crore
Honasa Consumer	Fireside Ventures Fund Sofina Ventures S.A. Stellaris Venture Partners India I	₹922 crore
Tata Technologies	Alpha TC Holdings Pte. Ltd Tata Capital Growth Fund I	₹692 crore

Source: Primedatabase

Open Sesame with IPO markets

The opening up of the IPO market as an exit route is good news for PE and VC investors. Even if they’re not a part of the offer-for-sale in an issue, being part of a public listed company frees-up their shares for block deals.

“IPOs are a credible exit channel for VC/PE funds. Revival of the IPO market is certainly good news for the investors. Equally good news is the performance of some of the marquee tech stocks that have been listed on the stock market in the last few years,” Fazal Ahad, managing director at Merisis Advisors told Business Insider India.

Thanks to the bull run of stock markets seen since August, there have been a lot of block deals by large PE/VC investors. In as many as 29 large block deals since September, Softbank, Tiger Global, Bain and TPG sold stakes in new-age internet companies like PB Fintech, Delhivery, Zomato and Paytm, as per data by Kotak Institutional Equities.

According to IVCA-EY monthly PE/VC roundup, August 2023 saw exits to the tune of $4.3 billion across 37 deals in August 2023. And, open market exits accounting for 57% of all exits by value.

The best is yet to come

The buzz in the primary and secondary markets coupled with the exits they provide is a sign of maturity in the VC ecosystem, say experts. And there are more to come, as per Redseer. As many as 30 unicorns that are valued over $1 billion will become IPO-ready next year.

For the smaller startups, there is the SME listing route who want to hit the markets at an earlier stage of their growth. “IPOs need to be valued right as public markets still look for profitable ventures, early profitability will enable startups to get exit through SME listings which has scaled up substantially in the last two years. This will take some time to evolve for startups,” said Manoj Agarwal, co-founder & managing partner, SeaFund.

The discipline of being a part of the listed universe also helps companies shrug off cash burn and move towards profitability. “Listed space gives rigour especially financial rigour to companies. This is something which the VCs like and now slowly but surely, there is acceptance in the IPO story of the startups,” says Bhaskar Majumdar, Managing Partner, Unicorn India Ventures.

As more and more such companies are entering a state of maturity, FY25 will be a better year for serious large-scale exit gains, opines Agarwal. In the meanwhile, it’s open season for PE/VC investors who are looking to chart their exit strategy.

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