India's mainboard IPO market raised ₹1.76 lakh crore in 2025, marking the highest single-year fundraising since at least 2015. According to Value Research analysis, this substantial figure masks a fundamental truth about where the money actually goes. Across the decade from 2015 to 2025, 66% of IPO proceeds came from offer for sale transactions, while only 34% represented fresh capital creation that would directly benefit the company. In 2025 specifically, 63% of the ₹1.76 lakh crore was from offer for sale, with fresh issues comprising 37% of the total. This trend is mirrored globally, with U.S. IPO proceeds reaching roughly $140 billion through mid-July 2026, already approaching the full-year record of $142.4 billion set in 2021. The second quarter alone demonstrated exceptional activity with 48 IPOs raising more than $100 billion.
Recent developments demonstrate the wealth-creating potential of IPOs, as evidenced by Morgan Stanley's latest quarterly results. The investment bank reported record net new assets of $148.4 billion and fee-based assets of $39 billion for the quarter, with over half of the net new money coming from IPOs of certain clients in the workplace channel. As Bloomberg reported, Elon Musk's aerospace company SpaceX is a customer of Morgan Stanley's workplace channel, which provides clients' employees with benefits like equity compensation and retirement plans. The impact was substantial, with about 4,000 to 4,400 staff at SpaceX made millionaires from the IPO, representing approximately 20% of the company's total workforce of 22,000 employees. This workplace business model has been described as "a gift that keeps on giving" by Morgan Stanley, as shares continue to unlock value through multiple phases of the IPO process.
Even when companies raise fresh capital through IPOs, the funds often don't support business expansion as typically understood. As reported by Value Research, a significant portion of fresh issue proceeds goes toward repaying existing debt rather than capital expenditure or new capacity. This means companies can raise fresh capital while not meaningfully investing in growing the business, instead simply swapping borrowed money for shareholder capital to strengthen their balance sheet. The analysis notes this distinction is rarely clear in IPO coverage, creating confusion about what constitutes genuine growth funding. Global markets show similar patterns, with many IPOs serving as liquidity events for early investors, employees, founders, or sponsors to monetize their ownership stakes.
IPO subscription numbers can be misleading indicators of investment quality, as retail allotment in oversubscribed issues is determined by computerized lottery rather than merit-based selection. According to Value Research data, companies with subscription rates over 40 times have shown mixed listing performance, with two companies losing money on day one despite high subscription levels. The analysis compares IPO applications to lottery tickets, emphasizing that subscription numbers tell investors nothing about the actual pricing of the issue or their chances of winning shares through the allocation process. This sentiment-driven approach can create early investor excitement that functions as a sentiment trap, as demonstrated by companies like SpaceX whose early trading patterns show surging gains followed by corrections below IPO prices.
A concerning trend has emerged where loss-making companies are increasingly listing publicly while still unprofitable, with 38 companies listing while reporting losses between 2015-2025. By FY25, 24 of these companies, approximately 60%, had turned profitable, while the remaining 14 companies remained loss-making. This represents a shift from the historical model where venture capital and private equity investors funded loss-making phases before exiting to public investors, to a pattern where public shareholders now carry risk that used to be borne by sophisticated, diversified private investors. The analysis suggests this transfer of risk burden from patient, experienced investors to ordinary public market participants is a significant market development, particularly as net equity supply turned positive in early 2026 for the first time since 2021, with new issuance now exceeding share retirements through buybacks.
