India's red-hot initial public offering market may look irresistible as foreign firms line up for listings, but the rush is not about raising funds to expand in a fast-growing market; it's about sending billions of dollars back to headquarters.
Just one of six foreign-based companies that listed their Indian units in Mumbai since 2024 raised new funds, with all others structured purely as secondary offerings - or offer for sale (OFS), where existing shareholders sell their holdings to the public without raising any new funds, according to data from Prime Database, an Indian market research firm.
Foreign-based parents of companies that have long invested in India pocketed nearly $5 billion through such secondary-offering IPOs, with Hyundai Motor and LG Electronics accounting for more than 80% of those payouts, the data showed. Simply put, for each dollar raised in these IPOs taken together, more than $59 went out.
And the trend is continuing: the planned $1 billion IPO of Walmart's Indian payments arm and Modern Times Group's $335 million IPO of its local gaming unit will both take the OFS route.
This week, Coca-Cola said the planned listing of its Indian bottler will have the American firm sell a portion of its stake. Banking sources said Carlsberg's planned Indian IPO will also have no new funds raised - it will also be an OFS.
The trend, which bankers and economists say is a result of sky-high stock valuations in India in recent years, shows that the prospect of a lucrative partial exit from Indian investments has become more attractive to many foreign companies than raising new funds to expand.
Global companies are pursuing "India listings as this provides them liquidity as well as a positive impact on the market cap for their parent," said Prashant Gupta, a partner at law firm Shardul Amarchand, which advised both Hyundai and LG on their OFS-structured IPOs.
Modern Times declined to comment, while Carlsberg said it is "exploring different options for increasing shareholder value which may potentially include an" Indian IPO.
Walmart's Indian unit, PhonePe, Hyundai, LG and other companies did not respond to Reuters requests for comment.
RUPEE WOES
The OFS trend comes at a troubling time for the Indian rupee, which has fallen 13% against the U.S. dollar since 2024 and 6% so far this year. That has raised concerns that the IPO-linked repatriations are compounding already heavy foreign capital outflows.
In January, MUFG Bank wrote that its analysis "shows one important contributor to Indian rupee weakness has been the strong IPO market in India."
So far this year, foreign portfolio investors have sold more than $23 billion of their holdings, surpassing 2025's record outflows of $18.9 billion.
IPO-linked capital outflows are "exerting a steady, though not abrupt, depreciation bias on the rupee," said Tanay Dalal, a senior vice president of business and economics research at Axis Bank.
Government officials and regulators have not indicated that they would try to curb the OFS trend, though India's Chief Economic Advisor V Anantha Nageswaran warned in November that IPOs had "increasingly become exit vehicles for early investors rather than mechanisms for raising long-term capital."
"This undermines the spirit of public markets," he said. He did not respond to Reuters queries.
THE VALUATIONS GAME
India was the world's second-largest IPO market in 2025 after the U.S., with 367 listings raising $21.8 billion, according to LSEG data. Its markets surged to record highs over the last two years before starting to struggle this year due to uncertainties related to the U.S.-Israeli war on Iran.
Still, a record $26 billion worth of IPOs are awaiting approvals, according to regulatory data.
The appeal for using the OFS route is rooted in valuations.
Indian-listed units of foreign firms have consistently traded at multiples that dwarf their parents. Add to that a growing group of domestic investors that has resulted in high valuations in India over the past two years, making local listings attractive, lawyers and bankers said.
At least six foreign companies that listed their Indian units in recent years trade at a significant premium to their overseas parents, according to LSEG data.
Nestle India, which listed in 1969, has a price-to-earnings ratio - a measure of stock valuations relative to profit - of nearly 77 times, versus 22 times for Swiss parent Nestle. LG Electronics India, which listed last year, trades at nearly 59 times versus 44 times for its South Korean parent, LG Electronics.
On the day Hyundai listed its Indian unit in 2024, it was valued at about $18 billion, roughly 40% of its parent's market capitalisation.
"What's driving this is smart capital allocation - asset owners capitalizing on cross-market valuation arbitrage," said Abhishek Gang, a director at U.S.-based investment bank Houlihan Lokey.
Since 2024, the IPOs of the Indian units of Italian transmission systems maker Carraro, Norwegian consumer goods group Orkla, and American auto parts maker Tenneco Clean Air all had OFS structures.
Only one - Britain-based Bupa's India unit, Niva Bupa Health Insurance - structured its local IPO as a mix of fresh fundraising of $84 million and a larger $146 million OFS component.
"The final structure balanced the company's capital requirements with shareholder objectives, with the fresh capital supporting growth plans and the OFS providing partial liquidity to existing investors," Niva Bupa said in a statement to Reuters.
