Private equity firms in India with mature, older-vintage assets are broadening their search for exit routes beyond the stock market, as a soft initial public offering (IPO) run prompts fund managers to explore secondary trades and deals between rival PE sponsors.
For PEs originally said to have explored initial public offerings, the strongest interest to explore alternate routes 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," said Prakash Bulusu, joint chief executive officer at Fairfax-backed investment banking firm IIFL Capital Services.
On 6 August, global private equity giant KKR announced the acquisition of the Indian hospital operations of Stockholm-based Medicover AB for $1.3 billion. The deal was said to have emerged as discussions to take the company public fell through, after the IPO had been planned since December.
Mint had also reported on 6 May that Chennai-based NBFC Veritas Finance Ltd, which is backed by the likes of 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 its IPO plans.
- Initial public offering exits fell 47% to $801 million in the first half of 2026.
- Total private equity exit value in India dropped 29% year-on-year to $9.4 billion.
- KKR bought Medicover's Indian hospitals for $1.3 billion after IPO plans collapsed.
- General partners are using secondary sales and continuation vehicles to boost distributed-to-paid-in capital ratios.
- The 2026 regulatory changes now make trade sales and secondary transfers more tax-efficient.
While India's primary market activity seems to be finally picking up pace, the first half of the year has not played out in favour of private funds, which decided to use initial public offerings as exit routes this year.
Why ageing funds are turning to secondary deals
Exits executed through IPOs declined 47% year-on-year to $801 million across 12 transactions during the six months ended 30 June, according to data from EY and the Indian Private Equity & Venture Capital Association. Total exit values in the country fell 29% in the same period to $9.4 billion. Of this, open-market sales generated $4.1 billion, representing 44% of total exit value, while secondary trades recorded $1 billion across 19 transactions during the same period.
The drop in public market proceeds coincides with capital deployed around the 2016-2021 so-called 'vintage years' reaching typical five-to-ten year holding period limits.
While alternate exit routes are becoming a more deliberate part of exit planning, "IPOs will continue to remain relevant, particularly for quality assets," said Apurva Kanvinde, partner at M&A legal advisory firm Juris Corp. "But IPOs are closely tied to market windows, valuation expectations and investor appetite," he added.
With general partners (GPs) facing heightened pressure from limited partners to improve distributed-to-paid-in capital (DPI) ratios, fund managers are deploying secondary transfers, sponsor-to-sponsor buyouts, and continuation vehicles to return capital to investors.
"DPI is an important factor, particularly for older vintages where sponsors have held assets for longer than originally envisaged," Bulusu said. "A secondary transaction can provide certainty of execution and immediate liquidity, whereas an IPO involves market timing, regulatory processes, investor demand and post-listing lock-ins."
In fact, Mint had reported on 13 April that over 10 active IPO mandates—irrespective of investor backing—had transitioned to this dual-track model, especially for deals in the ₹500-2,000 crore range.
Capital market lawyers that Mint spoke to also said that regulatory overhauls are enabling more flexibility for alternative transactions over unpredictable IPO exits.
Regulatory changes are adding to the pull
"What's making this more than a market-appetite story is that 2026's regulatory overhaul is actively reshaping how lawyers structure exits," said Akshat Pande, managing partner at corporate legal advisory firm Alpha Partners. "A relaxed Press Note 3 on FDI eligibility, a Finance Act 2026 that puts trade sales, buybacks, and secondary (LP-to-LP or GP-led) transfers on distinct capital-gains regimes, and raised buyback thresholds," he said, are making alternate exits even more lucrative.
IIFL's Bulusu said he expects to see more situations in which sponsors are willing to trade some potential IPO upside for greater certainty of execution and faster DPI, particularly for mature assets.