Private equity funds in India are increasingly turning to secondary sales and sponsor-to-sponsor buyouts as initial public offering exits face significant challenges. According to reports from Mint, IPO exits declined 47% year-on-year to $801 million across 12 transactions during the first half of 2026. Total private equity exit values dropped 29% year-on-year to $9.4 billion, with open-market sales generating $4.1 billion and secondary trades recording $1 billion across 19 transactions during the same period. The decline coincides with capital deployed around the 2016-2021 vintage years reaching typical five-to-ten year holding period limits.
Fund managers are showing strongest interest in exploring alternate exit routes for businesses with strong earnings visibility and cash-flow generation. As reported by Mint, Prakash Bulusu, joint chief executive officer at Fairfax-backed investment banking firm IIFL Capital Services, noted that the strongest interest is currently in businesses where "earnings visibility and cash-flow generation are relatively strong—financial services, healthcare, consumer businesses, technology-enabled companies and select manufacturing and industrial platforms." This strategic pivot reflects the maturation of older vintage assets that require more sophisticated exit planning beyond traditional IPO routes.
Recent market developments highlight the shift toward alternative exit mechanisms. According to Mint, KKR announced the acquisition of Medicover AB's Indian hospital operations for $1.3 billion on 6 August, after IPO plans fell through after being planned since December. Similarly, Chennai-based NBFC Veritas Finance Ltd, backed by Kedaara Capital and Norwest Venture Partners, was considering a largely secondary deal of up to $100 million to offer exits to early investors as volatile markets delayed IPO plans. The dual-track model has gained traction, with over 10 active IPO mandates transitioning to this approach, especially for deals in the ₹500-2,000 crore range.
Recent regulatory reforms are making alternative exit routes more attractive and tax-efficient for fund managers. As reported by Mint, Akshat Pande, managing partner at corporate legal advisory firm Alpha Partners, noted that 2026's regulatory overhaul is actively reshaping how lawyers structure exits. The relaxed Press Note 3 on FDI eligibility, Finance Act 2026 that puts trade sales, buybacks, and secondary transfers on distinct capital-gains regimes, and raised buyback thresholds are making alternate exits even more lucrative. These changes are enabling more flexibility for alternative transactions over unpredictable IPO exits.
General partners are facing heightened pressure from limited partners to improve distributed-to-paid-in capital ratios, particularly for older vintage funds. According to Mint, Bulusu explained that "DPI is an important factor, particularly for older vintages where sponsors have held assets for longer than originally envisaged." Fund managers are deploying secondary transfers, sponsor-to-sponsor buyouts, and continuation vehicles to return capital to investors, with secondary transactions providing certainty of execution and immediate liquidity compared to IPOs that involve market timing and regulatory processes.
