At a time when India’s primary markets continue to attract global attention, the narrative that IPOs are increasingly being used as exit platforms for private equity and early investors has gained traction among market participants. Addressing these concerns, Securities and Exchange Board of India chairman Tuhin Kanta Pandey offered a data-driven rebuttal, arguing that the structure of IPO fundraising has become more balanced over time rather than more exit-heavy.

Speaking at the 14th Annual Convention of the Association of Investment Bankers of India, Pandey highlighted that the dominance of offers for sale (OFS) in IPOs peaked during the extraordinary conditions of the pandemic years and has since moderated meaningfully. According to SEBI data, nearly 87 percent of IPO proceeds in 2020 came through OFS, a period marked by elevated private market exits and risk recalibration by global investors. By 2025, this share has fallen to about 55 percent, with fresh issues accounting for the remaining 45 percent.

The regulator’s data-driven stance challenges the perception that public markets are being used primarily to monetise legacy holdings rather than fund growth. Pandey emphasised that IPOs naturally represent a transition point in a company’s lifecycle. Early-stage investors, having funded risk and scale-up phases, often redeploy capital once businesses mature and seek public ownership. Seen in this context, a degree of OFS is structurally inherent rather than a sign of market distortion.

Importantly, the SEBI chief drew a clear distinction between mainboard and SME IPOs. He noted that SME offerings remain largely growth-oriented, with roughly 75 percent of funds raised through fresh issuance. This suggests that smaller companies are still approaching public markets primarily to finance expansion, capacity building, and balance sheet strengthening, rather than investor exits. The message was clear: broad-brush criticism of IPO quality does not align with segment-level data.

Beyond IPO composition, Pandey addressed another recurring industry concern — regulatory timelines. He said SEBI’s average processing time for mainboard IPO filings stands at under one month, provided documents are submitted correctly. Excluding periods when filings are with other regulators or returned to issuers for clarification, draft offer documents are typically cleared in 26 to 28 days. Only 43 IPO filings are currently pending beyond three months, largely due to issuer-side delays or external approvals.

This remark subtly shifted responsibility back to merchant bankers and issuers, reinforcing SEBI’s long-standing position that faster approvals are contingent on “first-time right” filings. The regulator, Pandey reiterated, is focused on improving disclosure quality rather than compressing timelines at the cost of investor protection. Better disclosures, in SEBI’s view, are a more durable safeguard than prescriptive controls.

On valuation, the chairman struck a notably hands-off tone. Acknowledging that pricing is often subjective, he said SEBI does not seek to intervene directly in valuation decisions. Instead, regulatory scrutiny is directed at ensuring clarity around business models, peer comparisons, and the stated objectives of the issue. This disclosure-centric approach signals continuity in policy, even as market cycles fluctuate.

Pandey also underlined increased regulatory attention on SME IPOs, particularly around fund utilisation and transparency. As more smaller companies tap public markets, SEBI sees disclosure discipline as critical to sustaining investor confidence and preventing misallocation of capital at the micro end of the market.

One of the more structural signals from the speech was SEBI’s assessment of capital flows. Pandey noted that India’s markets are now far less dependent on foreign portfolio investors (FPIs) than in the past. Rising domestic institutional and retail participation has created a more stable ownership base, anchored to India’s economic fundamentals rather than global risk-on or risk-off cycles. As a result, SEBI does not view episodic FPI outflows in isolation, since domestic capital has increasingly acted as a counterbalance.

This evolution in market structure reduces vulnerability to sudden global shocks and strengthens India’s case as a relatively resilient investment destination. More context on SEBI’s regulatory philosophy and IPO framework is available on the regulator’s official platform, accessible through the SEBI section on primary markets.

From a market impact perspective, SEBI’s remarks are likely to support sentiment around upcoming IPOs, especially those facing scepticism over promoter or investor sell-downs. For India, the broader implication is the normalisation of capital recycling without undermining growth funding.