Investors need to look at exit options beyond IPOs in India, say limited partners

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Limited partners (LPs) urged fellow investors to look beyond IPOs as exit strategies in India amidst buoyant market conditions, even as a slew of prominent startups including Ather Energy, BoAt, Cardekho, Zepto, Bluestone are hoping for their stock market debut in 2025.

Speaking at the IVCA Conclave 2025 in Mumbai, Kunal Sood, Managing Director, Pantheon and Chair, IVCA LP Council said, “We are seeing FII selling. In first 40 days of the year, about $10 billion of capital has left India. And the stock market has corrected. So I think what we need is that while the playbook has worked in an environment that was more benign and congenial, I think you'll need to make tweaks to that playbook as we enter the current environment. For example, last year was very strong on exits and IPO markets were conducive.”

According to Neha Grover, Regional Lead, South Asia Funds group, IFC, while India is a compelling opportunity at the moment, there is still the concern of high valuations and limited opportunities for exits.

“If you look at valuations, they are high. Relative to all other geographies, all other emerging markets, they're definitely high. But having said that, people have still made money. And that is shown in the exits that we've seen over the last few years. So valuations are high, but there is also high growth. Therefore, there is a risk-adjusted return that we can see is generated in India,” she said.

Grover added that in the last five or six years, about $130-odd billion of exits have happened in India. “That's about two-thirds of the overall exits that have happened over the last decade and a half. The risk to that is also, most of these exits have also been to the listed markets.”

Amit Sachdeva, managing director at AlpInvest Partners highlighted that in the first half of 2024, IPO markets were very robust. Nearly 60 percent of PE/VC exits were actually through the IPO markets.

Sachdeva is still bullish on the India market saying, “It feels that the environment is much better. And there is definitely a case to be made on the back of secular trends. Foreign exchange is more stable, exit environment being more robust, buyouts becoming more prevalent.”

“The overall attractiveness of the PE/ VC industry is definitely a lot more than where we were,” he added.

According to EY IVCA report on India's PE/VC outlook for 2025, despite global challenges, 2024 marked the second highest-ever investments of $56 billion, driven by an all-time high in deal volume, with 1,352 deals—a 54 percent year-on-year surge.