Wealthy individuals and institutions often snap up shares in private transactions, which is caused by the potential high returns of future initial public offerings (IPOs). However, the surging market has cast many IPO plans, which has also triggered a cautious attitude in the pre-IPO phase. According to bankers and lawyers working on pre-trading of IPOs, early crowded investors now want to bulletproof their investments.
Khaitan & Co. “Investors are increasingly demanding readjustment and discounted valuations, more control or shares, and negotiating on closing timetables to mitigate risks associated with current market conditions,” said Vineet Shingal, partner of the company.
Please read also: Digital Lender Kissht prepares $225 million IPO, clicking on three bankers
Some of the companies that raised funds for the former IPO include Pine Labs, Porter, Groww, Zepto and Cred. Mint It is not possible to determine whether the IPO deal is being renegotiated for them. The query sent to the company has not been resolved.
“Given the large investment in pre-IPO transactions, investors have greater negotiating capabilities, coupled with volatility in the stock market, investors are trying to renegotiate terms with ongoing deals,” said Snigdhaneel Saraf and Partners partner Snigdhaneel Satpathy.
In 2023, transactions to launch the landscape slowed, and after a pandemic-driven surge in funding, the funding dropped to $7 billion from $25 billion the previous year. With late trading reappearing, investors' interest relies on pre-IPO trading as their potential will yield clearer and faster returns. However, market volatility and weaker technology lists play the darling.
Please read also: TPG acquisition Siemens Gamesa's wind turbine business in India and Sri Lanka
FirstCry stock is listed at a 40% premium, while Swiggy is listed at a 5% price. Ola Electric listed flat, but soared 20% on the day of listing. However, so far, the stocks of these companies have dropped by 42-48% in 2025. Meanwhile, corporate technology listed at a 1% discount has risen 14% so far.
Nifty 50 has dropped 7% since the peak in September. Meanwhile, the Indian VIX (the fear meter of the market) surged 52%, indicating a sharp rise in market volatility and investor uneasiness.
“We have seen some disadvantages in the recently listed IPOs with HNI (High Network individual) and retail subscriptions.
As a result, several investors are repositioning the pre-IPO round or pushing structural trading to reduce downside risks. “We are now seeing more examples of renegotiation than in the last quarter,” said Khaitan's Shingal.
“Investors certainly have a waiting mode to watch. The demand for IPO companies from home offices and HNI is strong for companies like Swiggy, FirstCry, Oyo, etc. To judge how the public market will eventually evaluate how the public market valued an IPO last year, thus lower than the IPO price.
Indian startups raised $355 million in 17 deals in 2024, up from $235 million in six deals in 2023, according to Venture Intelligence.
Please read also: Why JM Financial's Agarwal relies on results to shape growth
According to an industry viewer, the founder of a startup recently received commitments from 10 investors in the previous round of the IPO, but only two people eventually signed as the rest hoped to renegotiate as the market became volatile. Mint Earlier reports said that in a tariff war by U.S. President Donald Trump, the appetite for IPOs has decreased and dried up new products in the market during a global turmoil.
“There are more than a dozen venture-backed startups in India currently at various stages of preparing for an IPO. Most, if not all, choose to postpone rather than cancel their listing plans. The main reason is to compress valuation multiples.” This has led to sales shareholders being more open to real-world valuation and structured transactions to generate liquidity through partial or complete exports, he said.
“Based on current market sentiment, the company is reevaluating its strategy, resulting in some changes in the plans that affect time and terms,” said Amit Ramchandani, CEO and head of investment banking at Motilal Oswal Financial Services.
