Market Slowdown Impacts IPO Exits

Mumbai: Amid a volatile market, companies are reconsidering their public listing plans, potentially affecting investor exits through IPOs this year. A recent report by Bain & Company and IVCA highlights a significant slowdown in PE-VC deal activities, attributing it to global uncertainties fueled by tariffs.

The value of IPO exits saw a remarkable increase to nearly $4 billion in 2024 from $1.8 billion in 2023, thanks to a buoyant market. However, the current year tells a different story, with fewer IPO filings and companies adjusting their issue sizes and valuations to navigate the choppy waters.

Investor Strategies in a Slowdown

"From an LP perspective, the exit is crucial for liquidity. LPs are not seeing the desired cash flow, pushing some funds to seek exits, even if it means reducing issue sizes and tempering valuations," explained Prabhav Kashyap, a partner at Bain & Company.

Examples like Ather Energy's muted listing and Urban Company's downsized IPO underscore the challenges faced in the current market. Despite these hurdles, PE-VC investments in 2024 rebounded, growing by 9% year-on-year to $43 billion, driven by an uptick in VC deals.

Looking Ahead

The broader deal environment remains cautious, with investors favoring companies with strong local market exposure. "Deal activity inevitably slows during uncertainties. Sectors like manufacturing and pharmaceuticals are under scrutiny for potential tariff impacts," Kashyap added.