Pre-IPO Fundraising Doubles in 2025, Fails to Match 2023 Highs
Overview
Pre-IPO fundraising in 2025 more than doubled year-over-year, reaching ₹916 crore. However, this figure fell short of the 2023 peak, as a shrinking gap between pre-IPO and IPO prices, faster deal executions, and investor caution led companies to bypass these placements. Many firms now opt for direct IPO listings to avoid dilution.
Pre-IPO Activity Shows Growth, But Lags Previous Peak
Pre-initial public offering (pre-IPO) fundraising more than doubled in 2025 compared to the previous year, signaling a partial revival. However, the total capital raised and the number of deals remained below the record levels achieved in 2023. This trend highlights a shifting dynamic in how companies access early-stage capital before their main market debut.
Funding Numbers and Trends
In 2025, eleven companies successfully raised ₹916 crore through pre-IPO placements. This represents a significant increase from 2024, when eight companies secured ₹387 crore. Despite this growth, the market has not yet returned to its 2023 zenith, where thirteen firms collectively raised a record ₹1,074 crore. Bankers attribute this slowdown to a narrowing pricing gap between pre-IPO rounds and the actual IPO price, making these placements less attractive.
Pricing Disconnect and Strategic Shifts
The primary driver for the decline in deal volume and value over the past two years is the diminishing arbitrage opportunity. Companies are increasingly finding that the price offered in pre-IPO rounds is too close to, or even above, their eventual IPO price. This proximity reduces the incentive for investors seeking early-stage gains and for companies looking to secure significant discounts.
Bhavesh A Shah, managing director and head of investment banking at Equirus, noted that many IPOs in 2025 were relatively small, under ₹500 crore. "If a pre-IPO is done for such issues, the IPO size shrinks further, making it harder to attract large investors," he explained. Consequently, issuers are increasingly skipping pre-IPO placements, opting instead to seek optimal pricing directly in the IPO market.
Investor Caution and Emerging Alternatives
Heightened investor sensitivity to valuations, coupled with a faster pace of IPO launches, has encouraged companies to avoid equity dilution through pre-IPO rounds. When demand appears robust, issuers prefer to preserve capital and avoid pre-listing share sales. Mahavir Lunawat, chairman and managing director of Pantomath Capital, observed that the value arbitrage in late-stage pre-IPO deals has eroded. "In some cases, IPO pricing has been more conservative, even coming in below pre-IPO transaction levels, prompting investors to reassess risk-reward dynamics," Lunawat stated.
Furthermore, a structural shift is underway with the rise of dedicated alternative investment funds (AIFs) and long-horizon private market funds. These entities are increasingly filling the gap left by traditional pre-IPO funding, offering a more patient and aligned capital pathway for issuers and investors alike. Pure-play pre-IPO volumes are cooling as a result, even as the broader capital formation ecosystem continues to strengthen.
