The findings echo comments by chief economic adviser V Anantha Nageswaran, who recently said IPOs are increasingly becoming exit routes for early-stage investors rather than vehicles for raising long-term capital.

Only a quarter of IPO equity earmarked for capex, BoB study shows

Companies Relying Heavily on IPOs for Debt Repayment and Investor Exits

Recent research by Bank of Baroda's chief economist Madan Sabnavis has shed light on the true purpose of initial public offerings (IPOs) in India.

Study Overview

189 IPOs worth Rs 1.82 lakh crore analyzed in the first seven months of FY26
Companies planned to raise Rs 1.20 lakh crore through fresh equity and Rs 62,000 crore via offer-for-sale (OFS)

Breakdown of Funds Allocated

Capital Expenditure (Capex): 26% of fresh equity component (Rs 31,200 crore)
Debt Repayment: 29% of fresh equity component (Rs 34,800 crore)
Investments in Subsidiaries: 9% of fresh equity component (Rs 10,800 crore)
Working Capital: 6.2% of fresh equity component (Rs 7,560 crore)
Undisclosed Funds: 24.5% of fresh equity component (Rs 31,080 crore)

Concerns Over IPO Purpose

Chief economic adviser V Anantha Nageswaran recently expressed concerns that IPOs are becoming exit routes for early-stage investors rather than vehicles for raising long-term capital.

"This undermines the spirit of public markets," he said, adding that India's capital markets must grow not just in scale but in purpose.

Implications for Companies and Investors

The findings of the study suggest that companies are relying heavily on IPOs for debt repayment and investor exits, rather than using the funds for new investment plans.

When existing shareholders sell their stake, proceeds go to them and not to the company for business plans.