IPO boom or bust? Citi’s Rahul Saraf says 2025 could be a bigger year

A key advantage, Saraf pointed out, is that many of these IPOs are structured as offer-for-sale (OFS) issues, meaning the businesses themselves are not in immediate need of capital.

Rahul Saraf, Head of Investment Banking at Citi, remains an eternal optimist and suggests that despite the turbulence in India’s primary markets, 2025 could be a bigger year for IPOs than 2024.

At the Moneycontrol Global Wealth Summit in Mumbai on March 7, Saraf said "There’s about Rs 1.5 lakh crore worth of IPOs in the pipeline—already mandated, soft mandated, or likely to be mandated in the next 12 months," he said. But with the markets currently on shaky ground, the question, he admitted, is about timing.

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A key advantage, Saraf pointed out, is that many of these IPOs are structured as offer-for-sale (OFS) issues, meaning the businesses themselves are not in immediate need of capital. This allows issuers the flexibility to wait for better market conditions. "If the market is soft, which it is today, they have the luxury to defer by three to six months if needed," he said.

That flexibility might prove crucial. While last year’s IPO rush looked promising at first, it has turned sour for investors. About 70 percent of the issues in 2024 are trading below their listing price, and 45 percent are below the IPO price itself.

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In a separate conversation on the panel, he also shed light on government IPOs this year and believes that the focus will remain on sell-downs rather than fresh listings for the government. He noted that most of India’s major state-owned enterprises—the Maharatnas and Navratnas—are already listed.

"The government has had a programme to gradually reduce its stake in these companies, and we believe that will continue," he said. "There aren’t too many large, privately held government-owned companies left to bring to market."

However, the broader disinvestment push is unlikely to slow down. "Does the government have the resolve to keep selling down and own less of the PSUs? The answer is yes," Saraf affirmed.

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