India PE funds turn to secondaries as IPO exits halve in first half
With IPO proceeds down 47% and 2016–2021 vintage assets hitting maturity, Indian private equity sponsors are restructuring exits through secondary sales and sponsor-to-sponsor deals to satisfy LP demands for distributions.
Private equity exits through Indian initial public offerings collapsed 47% year-on-year to $801 million across just 12 transactions in the first half of 2026, according to data from EY and the Indian Private Equity & Venture Capital Association. Total PE exit value in the country fell 29% to $9.4 billion over the same period.
The shortfall is forcing fund managers with ageing portfolios to pursue alternative routes. Secondary trades accounted for $1 billion across 19 transactions in the six months to 30 June, while open-market sales generated $4.1 billion, or 44% of total exit value. General partners are increasingly deploying sponsor-to-sponsor buyouts and continuation vehicles to return capital.
The pressure is structural. Capital deployed during the 2016–2021 vintage years is now reaching the outer limits of typical five-to-ten-year holding periods. Limited partners are demanding higher distributed-to-paid-in capital ratios, and fund managers can no longer wait for a favourable listing window.
"DPI is an important factor, particularly for older vintages where sponsors have held assets for longer than originally envisaged," said Prakash Bulusu, joint chief executive at Fairfax-backed IIFL Capital Services. "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."
Deals illustrate the shift
The most prominent example came on 6 August, when KKR agreed to acquire the Indian hospital operations of Stockholm-listed Medicover AB for $1.3 billion. The transaction emerged only after discussions to take the business public, planned since December, fell apart.
Chennai-based non-banking finance company Veritas Finance, backed by Kedaara Capital and Norwest Venture Partners, is weighing a largely secondary transaction of up to $100 million to provide exits to early investors after volatile markets delayed its IPO, according to a May report.
Bulusu said the strongest appetite for non-IPO exits is concentrated in sectors with reliable earnings and cash-flow generation: financial services, healthcare, consumer businesses, technology-enabled platforms, and select manufacturing and industrial companies.
More than 10 active IPO mandates have moved to a dual-track model, particularly for deals in the ₹500–2,000 crore range, keeping a listing option alive while simultaneously courting private buyers.
Regulatory reform lowers friction
Lawyers point to 2026 legislative changes as a second catalyst. A relaxed Press Note 3 on foreign direct investment eligibility, combined with Finance Act 2026 provisions that place trade sales, buybacks, and secondary transfers on distinct capital-gains regimes, have made structured exits more tax-efficient than in prior years.
"What's making this more than a market-appetite story is that 2026's regulatory overhaul is actively reshaping how lawyers structure exits," said Akshat Pande, managing partner at Alpha Partners.
Apurva Kanvinde, partner at M&A advisory firm Juris Corp, cautioned that public listings will not disappear. "IPOs will continue to remain relevant, particularly for quality assets," he said, while noting they remain "closely tied to market windows, valuation expectations and investor appetite."
For investors tracking Indian PE, the practical implication is clear: expect a sustained pipeline of secondary and continuation-fund transactions through 2027 as the 2016–2021 cohort winds down, with sponsors willing to sacrifice some upside for faster, more certain liquidity.
