New Delhi, August 13 – Private equity firms in India, managing mature assets, are increasingly seeking exit routes beyond traditional stock market listings. A subdued initial public offering (IPO) environment is prompting fund managers to explore secondary trades and deals between rival private equity sponsors.
This shift towards alternative exits is particularly evident in businesses exhibiting strong earnings visibility and cash-flow generation, such as financial services, healthcare, consumer businesses, technology-enabled companies, and select manufacturing and industrial platforms. Prakash Bulusu, joint chief executive officer at Fairfax-backed investment banking firm IIFL Capital Services, noted that these sectors are showing the most interest in exploring alternative routes, even when IPOs were initially considered.
A recent example illustrating this trend is KKR’s acquisition of Medicover AB’s Indian hospital operations for $1.3 billion on August 6. This deal reportedly materialized after discussions to take the company public, which had been planned since December, fell through. Similarly, Mint reported on May 6 that Chennai-based NBFC Veritas Finance Ltd, backed by Kedaara Capital and Norwest Venture Partners, was contemplating a largely secondary deal of up to $100 million to facilitate exits for early investors, as market volatility delayed its IPO plans.
While India’s primary market activity appears to be gaining momentum, the first half of the year was challenging for private funds intending to use IPOs as exit strategies. Data from EY and the Indian Private Equity & Venture Capital Association indicates that exits through IPOs declined by 47% year-on-year to $801 million across 12 transactions during the six months ending June 30. Total exit values in the country decreased by 29% in the same period to $9.4 billion. Of this, open-market sales contributed $4.1 billion, accounting for 44% of the total exit value, while secondary trades recorded $1 billion across 19 transactions during the same period.
This decline in public market proceeds coincides with capital deployed during the 2016-2021 “vintage years” reaching their typical five-to-ten-year holding period limits.
Apurva Kanvinde, partner at M&A legal advisory firm Juris Corp, stated that while alternative exit routes are becoming a more deliberate part of exit planning, “IPOs will continue to remain relevant, particularly for quality assets.” However, he added, “IPOs are closely tied to market windows, valuation expectations and investor appetite.”
Under heightened pressure from limited partners to improve distributed-to-paid-in capital (DPI) ratios, general partners (GPs) are increasingly employing secondary transfers, sponsor-to-sponsor buyouts, and continuation vehicles to return capital to investors. Bulusu emphasized, “DPI is an important factor, particularly for older vintages where sponsors have held assets for longer than originally envisaged. A secondary transaction can provide certainty of execution and immediate liquidity, whereas an IPO involves market timing, regulatory processes, investor demand and post-listing lock-ins.”
Mint had previously reported on April 13 that over 10 active IPO mandates, irrespective of investor backing, had transitioned to this dual-track model, especially for deals in the Rs. 500-2,000 crore range.
Capital market lawyers also suggest that regulatory overhauls are fostering greater flexibility for alternative transactions over unpredictable IPO exits. Akshat Pande, managing partner at corporate legal advisory firm Alpha Partners, noted, “What’s making this more than a market-appetite story is that 2026’s regulatory overhaul is actively reshaping how lawyers structure exits.” He cited a relaxed Press Note 3 on FDI eligibility, a Finance Act 2026 that establishes distinct capital-gains regimes for trade sales, buybacks, and secondary (LP-to-LP or GP-led) transfers, and raised buyback thresholds as factors making alternate exits more appealing.
IIFL’s Bulusu anticipates an increase in situations where sponsors are willing to trade some potential IPO upside for greater certainty of execution and faster DPI, particularly for mature assets.
