India’s listing feast: IPO window opens, OFS door widens | Explained
The Indian stock market is seeing a surge in IPOs, but a growing portion of these listings are driven by Offer-for-Sale (OFS) deals rather than fresh capital infusion. This shift suggests that the primary market is increasingly serving as an exit platform for early investors and private equity firms.
Why it matters
The trend raises questions about the long-term impact of IPOs on corporate innovation and capital formation in the Indian economy.
India Inc. is now having its heyday, with corporates celebrating a coming-out party of initial public offerings (IPOs), while promoters are cashing in through offer-for-sale (OFS) deals.
The unusual trend is that the IPO process itself has increasingly become an exit mechanism, even as questions remain over whether India has enough “I” in its IPOs—investment, innovation and infusion of fresh capital.
Worldwide, OFS is strictly not a primary market route, but in India, when an unlisted firm lists on the stock exchange, an OFS can be included in the IPO prospectus, also known as a Red Herring Prospectus (RHP). Technically OFS enters through the primary market window, but it behaves like a secondary market transaction.
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