West Asia Conflict Slows India's IPO Market, Delays Investor Exits
MUMBAI: A prolonged war in West Asia is significantly slowing down the pace of initial public offerings (IPOs) in India, delaying exits for venture capital (VC) and private equity (PE) investors as companies reassess their timelines to launch public issues amidst a volatile market environment. In 2025, IPOs drove nearly 40% of public market exits for VC and PE growth investors, which includes select PE investments, according to a joint report by Bain & Company and The Indian Venture and Alternate Capital Association (IVCA). This was largely helped by a higher number of listings worth more than $100 million.
Impact on Public Market Exits
Overall, public markets led about 67% of total exits worth $7 billion last year. However, non-IPO public market exits declined by approximately 22% in value as investors prioritized liquidity events that offered better price discovery. Prabhav Kashyap, a partner at Bain & Company, explained to TOI, "There will be a slowdown in the pace of exits. Hold periods will start to get a bit longer as there will be a mismatch between what buyers and sellers are expecting in terms of market pricing and valuations."
Specific IPO Delays and Market Volatility
The war has directly impacted specific high-profile IPOs. For instance, Walmart's PhonePe, which was all set for a $1.3 billion IPO in April, has postponed its listing. It is understood that war-jittered investors seemed reluctant to ascribe it the $15 billion valuation the firm had been targeting. Earlier in the week, XED Executive Development, India's first gift city IPO, withdrew its issue due to weak market conditions. Kashyap noted, "Timing of exit through IPOs will be revisited."
With markets taking a beating since the conflict began, India's IPO market has taken a hit after a stellar run last year. The Sensex and Nifty ended FY26 down by 5.4% and 3.6%, respectively, reflecting the broader economic uncertainty.
Broader Implications for VC-PE Funding and Deal Making
After a lackluster 2025 that saw overall VC-PE funding drop by 18% year-on-year, the war has cast a cloud over deal making this year as well. Investors are turning cautious with capital deployment despite sitting on a substantial pool of funds. Fundraising by investors touched nearly $5.4 billion in 2025, roughly double the levels of 2024, mainly driven by a surge in funds worth over $100 million and a 35% increase in average fund size.
Kashyap added, "There is always some slowdown that happens with respect to deal making during any volatility," suggesting that there could be some amount of distress deals and down rounds. "Investors are currently prioritizing risk assessment for portfolio companies impacted by the war and figuring out action plans."
This cautious approach underscores the broader challenges facing India's financial markets as geopolitical tensions continue to influence investor sentiment and strategic decisions in the IPO landscape.
