India’s IPO Market witnesses a structural shift towards domestic capital

India’s Initial Public Offering (IPO) market is one of the most active globally. In the first nine months of 2025, 81 IPOs collectively raised about ₹1.21 lakh crore, the second-highest in five years. This followed an all-time high of ₹2.18 lakh crore raised so far this year, as per recent data. This IPO boom seems to be a sustainable trend powered by India’s structural growth story and the necessity for private capital to power growth for mid-to-small companies, supported by a proactive regulatory environment.

In a candid conversation with Livemint, Arka Mookerjee, Partner, JSA Advocates and Solicitors, offered a comprehensive outlook of this bullish market and shared his insights on IPO valuations, the key role played by SEBI as a regulator and the potential impact of Artificial Intelligence (AI) on IPOs. Some edited excerpts:

Q. Given that FY 2024-25 and FY 2025-26 have been record years in terms of fund raise through IPOs, how much longer is the IPO market going to remain bullish?

Arka Mookerjee: Issuers with strong fundamentals will keep approaching the market to raise capital regardless of market conditions. With GST rate rationalisation, the government has signalled its intention to move towards lower overall spending (as overall tax receipts will reduce). Over the past 15 years, the government has been very focussed on fiscal prudence. It is very important for private capital to occupy a greater role in the nation’s finances. As data shows, India remains the only major economy which is growing at 6.5-7%.

Long tail of mid to small-sized companies that need capital will continue to become available to investors for investment through the IPO route. Banks can finance this growth only up to a point. With the financialisation of the economy and the reduction in deposit rates, there is a slow trend of conversion of savings to investment.

Q. What are your thoughts on the recent discourse surrounding over-valuation of IPOs?

Arka Mookerjee: The fundamental job of the Board of the Issuers and the investment bankers advising them is to sell the equity, not offer it at rock bottom prices. Despite our retail investor focussed outlook, ultimately, the regulator, the exchanges, issuers and intermediaries cannot fundamentally alter the nature of a buy and sell transactions, which at its core is based on a certain risk-reward ratio. Recent large IPOs have left enough on the table for investors, which is seen by the exuberant listing day gains on large IPOs as well.

It is fundamentally wrong to expect that in a free market/ free pricing regime that the valuation of an IPO bound company will be everything for everyone. The regulatory environment is positioned to ensure that there is enough information available for the investors to make an informed choice but not to spoon-feed investment decisions to retail investors.

Q. How would you analyse SEBI’s scorecard in regulating the IPO market?

Arka Mookerjee: In my experience, the regulator has remained on top of recent developments and continues to deliver timely and well thought out guidance. The injunction to MFs for pre-IPO and limiting it to anchor rounds may seem draconian to some. But, is not too far from the ground reality where Indian AMCs are cutting big checks and cornering a large part of the anchor rounds, even on large IPOs. Reducing the likelihood of MFs getting stuck with equity in companies that fail to list in time will ultimately benefit retail investors who are putting in life savings into these MFs. SEBI has remained receptive to the market and its inputs through committees, outreach programmes, informal and formal guidance. It has been nimble with its regulations with timely amendments and reviews. The ICDR of 2018 is also up for a thorough review.

On a lighter note, it may be worthwhile to bring back the name of all legal counsel on transactions – investment banks and counsels are instrumental in disseminating the regulator’s view with the purpose of educating IPO-bound companies. On a more serious note, it could consider increasing the scope of the Primary Market Advisory Committee r(PMAC) and Hybrid committee to ensure composition in line with market realities. Further, it would be worthwhile to consider a mechanism where guidance and instructions provided by SEBI to AIBI are formally recognised as having the force of law akin to circulars issued under the ICDR regulations.

Q. What role could AI play in IPOs?

Arka Mookerjee: AI remains a grey area for the IPO market presently. From newer trading tactics to summary of lengthy offer documents – the possibilities remain endless. However, there are some who are beginning to question the overall benefit of AI for the market at large. Ultimately, this is likely to become a useful tool in the hands of practitioners and regulators to help reduce time taken for routine work.

More recently, SEBI has been using AI to review documents and despite 100+ DRHPs in the last couple of weeks of September, the turnaround time from the regulator has been impressive. This is in part due to their use and encouragement of AI. For investors, hopefully, this will be a tool that can help summarise a 500 page document into a few key consumable points. Unfortunately, this process is fraught with issues, especially with AI hallucination rates being as high as 35%. Investors must think before investing and read the entire offer document carefully.

Q. What would your advice be for new lawyers looking to make a name in this market?

Arka Mookerjee: Currently, the IPO market in India is huge and offers a lot of opportunities. It is also very competitive, offering a low margin of error. It requires legal as well as practical skills imbibed through experience. I firmly believe hard work is never overrated, it should very much be part of the DNA of anyone who is looking to be successful in this profession. A client-first approach goes a long way in winning the confidence of clients. Another key factor remains consistency and a “never drop the ball” attitude.

I believe that a lawyer that continues to deliver quality advice based on facts and not assumptions, while remaining receptive to the requirements of clients, will always thrive.

Conclusion

All in all, the surge being witnessed in India’s IPO market is not just cyclical in nature. It is a structural phenomenon anchored by the nation’s strong growth trajectory and the need for capital across a spectrum of small and mid-sized businesses. While the debate around valuations persists, the regulatory environment is focused on ensuring investor protection at large. The regulator’s approach and its use of technologies like AI for tasks like document review, for instance, underscores its commitment to greater efficiency. For legal practitioners, the market presents a massive, competitive opportunity where hard work, consistency and a client-first approach will be the foundation for long-term success.

Note to the Reader: This article has been produced on behalf of the brand by HT Brand Studio and does not have journalistic/editorial involvement of Mint.