Sources: SEBI filings, Inc42, EY IPO Monitor, Herbert Smith Freehills, Dealsuite, Kalviro Ventures, PitchBook
India has firmly established itself as the world’s most active IPO market by deal count, with the pre-IPO landscape emerging as one of its most dynamic — and structurally important — segments. In 2025, 18 Indian startups listed on public markets collectively raising ₹41,248 crore, a record for new-age tech listings. Looking into 2026, a pipeline of unicorns and category leaders — PhonePe, Zepto, Razorpay, Flipkart, NSE, and Reliance Jio — could collectively raise over ₹50,000 crore, making this the most consequential IPO cycle in Indian capital markets history.
The pre-IPO market — the ecosystem of funding rounds, unlisted share trading, and grey market activity that precedes a formal listing — has grown dramatically to match this ambition. Pre-IPO rounds are now routinely happening 12–24 months before listing, with Family Offices, High-Net-Worth Individuals (HNIs), Alternative Investment Funds (AIFs), and crossover funds all competing for access. However, the market is undergoing structural recalibration: SEBI’s October 2025 ban on mutual fund participation in pre-IPO placements, a regulatory crackdown on the grey market, and a ‘profitability first’ shift in public market sentiment are all reshaping the rules of engagement.
In India, the ‘pre-IPO market’ encompasses several distinct layers. At the formal end, it includes structured fundraising rounds — Series C through pre-IPO — where institutional capital enters at negotiated valuations ahead of a DRHP filing. These rounds set benchmark valuations, reduce ownership concentration (which would otherwise overhang post-listing stock), and signal institutional confidence to public market investors.
At the informal end sits the grey market, an unregulated over-the-counter network where unlisted shares are bought and sold between individuals and unregistered brokers. Pricing in this market is driven by sentiment, grey market premium (GMP) expectations, and early DRHP disclosures — not by audited financials. SEBI has identified this as a systemic risk and is developing a ‘when-listed’ regulated platform to bring transparency to pre-listing trading.
The concept of pre-IPO investment has structurally evolved. As of 2025, anything up to two years before an IPO is considered a pre-IPO round. In addition to traditional crossover funds, a new category of dedicated pre-IPO funds has emerged. Family offices and HNIs have become the most consistently active participants in this space — a trend accelerated by the exclusion of mutual funds following SEBI’s October 2025 directive.
Total gross VC/PE exit value via IPOs reached $1.8 billion in 2024, nearly matching the 2021 boom peak of $2.3 billion. After a drought in 2022–23, this revival has catalysed fresh pre-IPO investment as fund managers position for the next liquidity wave. Lightspeed, Peak XV Partners, Accel, and SoftBank are among the marquee names actively using pre-IPO rounds as partial liquidity events, consistent with their strategy of gradual portfolio monetisation without creating stock overhangs.
City concentration remains pronounced: Bengaluru accounts for 26% of late-stage funding (AI, SaaS, logistics-tech), Delhi-NCR 25% (fintech, mobility, consumer tech), and Mumbai is rapidly emerging in fintech and EVs. Chennai and Hyderabad contribute selectively in healthtech and enterprise software.
Indian pre-IPO placements typically occur after a DRHP is filed — but before the public issue opens. They are offered at a discount to the expected IPO price to attract early institutional buyers and signal demand. The structure generally includes a 6-month post-IPO lock-in for non-promoter pre-IPO investors, with SEBI’s November 2025 consultation proposing more flexible ‘non-transferable’ marking to ease compliance.
RBI pricing guidelines under the Master Direction on Foreign Investment require that shares issued to non-resident investors are priced at or above Fair Market Value (FMV) — a rule that applies to pre-IPO foreign investor rounds and adds regulatory rigour to the process. This framework was updated in January 2025.
The 2026 IPO pipeline is the deepest since the 2021 tech listing wave, and the most financially mature. Unlike 2021, when loss-making growth stories commanded premium valuations, 2026 investors are demanding demonstrable profitability or credible near-term paths to it. The following table covers the major companies in or approaching the IPO funnel, representing the primary targets for pre-IPO investors.
| Company | Sector | Valuation Target | Key Notes | Expected Timing |
|---|---|---|---|---|
| PhonePe | Fintech / Payments | $9–10.5B | OFS only; Walmart, Tiger Global exit | H1 2026 |
| Zepto | Quick Commerce | $5–7B | ₹11,000 Cr; confidential pre-filed | H1–H2 2026 |
| Flipkart | E-Commerce | $60–70B | Walmart anchor; landmark tech IPO | 2026–2027 |
| NSE | Stock Exchange | ₹4.7–5.2L Cr | Regulatory settlement cleared | H2 2026 |
| Razorpay | Fintech / Payments | ~$5–7B | North of $700M issue; reverse flip done | H2 2026 |
| Groww | WealthTech | ₹40–42K Cr | ₹3,000–4,000 Cr issue; pre-IPO active | 2026–2027 |
| OYO | Hospitality Tech | ~$1B | ₹8,430 Cr; fresh issue + OFS | 2026 |
| SBI Mutual Fund | Asset Management | ~$7B | $1.2B expected | H1 2026 |
| Reliance Jio | Telecom / Digital | $100B+ | Flagship listing; digital growth story | 2026–2027 |
| Lenskart | D2C Eyewear | ₹69,741 Cr | ₹7,278 Cr IPO; SEBI approved 2025 | Early 2026 |
| PayU India | Fintech | ~$2–3B | Pre-IPO round underway; broke even H2 FY25 | H2 2026 |
| boAt | Consumer Electronics | ~₹8,000 Cr | ₹1,500 Cr; second listing attempt | 2026 |
| Snapdeal | E-Commerce | ~₹500 Cr | Confidential route; fresh + OFS | 2026 |
| Aye Finance | NBFC / FinTech | ~₹710 Cr | ₹1,010 Cr; AI-powered credit to SMEs | Listed Feb 2026 |
| Ather Energy | EV / Mobility | ~₹2,980 Cr | Benchmark EV listing | Listed 2025 |
Sources: Inc42 Indian Startup IPO Tracker 2026; SEBI DRHP filings; Kotak Neo; Multibagg AI; Outlook Business.
Several structural points stand out from this pipeline. The dominance of Offer For Sale (OFS) components — most visible in PhonePe’s all-OFS structure — reflects VC and PE investors using public markets as an exit mechanism rather than raising fresh capital. This is consistent with the global trend of financial sponsors managing partial exits to avoid stock overhangs. NSE’s eventual listing would be a systemic event for Indian capital markets, providing a benchmark institutional exchange listing that would likely set new standards for pre-IPO governance disclosures.
The October 2025 SEBI ban on mutual fund participation has fundamentally restructured who can access pre-IPO placements in India. Previously, hybrid and thematic mutual fund schemes had deployed an estimated ₹3,000–₹4,000 crore into pre-IPO holdings between FY23 and FY25, valuing them using internal models. SEBI’s concern was the mismatch between the illiquidity of unlisted shares and the daily redemption obligations of open-ended mutual funds. With this channel closed, the investor base has consolidated around AIFs, family offices, and global PE/VC.
| Investor Type | Regulatory Status | Profile | Activity Level / Notes |
|---|---|---|---|
| AIFs (Cat I, II, III) | Fully permitted; primary vehicle | Professional, regulated, SEBI oversight | Dominant; growing India-focused funds |
| Family Offices & HNIs | Permitted via unlisted market | High risk tolerance, long horizon | Extremely active; stepped in post-MF ban |
| Foreign VCs / PEs | Permitted (FEMA rules apply) | Global networks, large cheques | SoftBank, Tiger Global, Peak XV dominant |
| Domestic VC / PE | Permitted | Early backers seeking partial exits | Lightspeed, Accel, Premji Invest active |
| Mutual Funds | BANNED from Oct 2025 (SEBI) | N/A — barred from unlisted placements | Removed from pre-IPO; anchor-only |
| Crossover Funds | Permitted | Bridge public/private; pricing setters | Growing; Fidelity, Mirae type funds |
| Corporate Strategics | Permitted | Strategic entry before listing | Used in specific sectors |
| Retail Investors | Grey market only (unregulated) | No regulatory protection; high risk | Active but exposed; SEBI ‘when-listed’ pending |
The practical effect of the MF ban is nuanced. It has reduced the depth of the institutional investor pool and removed an important source of signalling value — mutual fund participation often validated IPO-bound companies’ credibility. Conversely, it has increased allocations available to HNIs and family offices, who now operate without large institutional investors crowding their deals. Pricing power in pre-IPO rounds has correspondingly shifted toward investment banks and anchor investors in the formal IPO process.
Indian startup valuations underwent a significant correction following the 2021–22 boom. The ‘down-round’ cycle of 2023–24 — when companies like Byju’s collapsed and edtech broadly repriced — recalibrated market expectations. By 2025, a new valuation discipline had emerged, underpinned by a public market premium for profitability and sustainable unit economics. The 2025 data showing that 55% of startup IPOs are now trading below their issue price has reinforced this shift, with pre-IPO valuations now closely anchored to expected public market comparables.
| Sector | Typical Valuation Metric | Investor Interest | Key Names / Notes |
|---|---|---|---|
| FinTech / Payments | 15x–25x Revenue | High — PE/strategic | PhonePe, Razorpay, Groww |
| SaaS / Enterprise Tech | 8x–18x ARR | High — crossover funds | Freshworks benchmark; AI premium |
| Quick Commerce | 8x–15x GMV | Very High — strategic | Zepto, Blinkit |
| E-Commerce / D2C | 4x–8x Revenue | Moderate–High | Flipkart, Lenskart, boAt |
| HealthTech | 6x–12x Revenue | High — PE + strategic | Practo, PharmEasy |
| EV / Clean Energy | 10x–20x Revenue | Very High | Ather |
| EdTech | 3x–6x Revenue | Moderate — cautious | Post-2022 reset |
| Logistics | 4x–8x EBITDA | Moderate | Porter, Shiprocket |
| WealthTech | 12x–20x Revenue | High | Groww, Angel One |
| Hospitality Tech | 2x–5x Revenue | Low–Moderate | OYO |
| NBFC / Lending | 2x–4x Book Value | Moderate | Aye Finance |
| Consumer Electronics | 3x–6x Revenue | Moderate | boAt |
Source: Inc42, GS Verde, PitchBook, EY IPO Monitor, company DRHP disclosures.
A critical valuation distinction has emerged between ‘pure-play technology’ businesses and ‘technology-enabled’ businesses. As one market observer noted, a company like OfBusiness — profitable but fundamentally a trading business with a tech layer — faces a different valuation framework than a SaaS company with recurring ARR. This distinction will increasingly define pre-IPO pricing in 2026 as investors model post-listing multiple sustainability.
The ‘small firm premium’ issue seen in UK mid-market M&A has an Indian parallel: pre-IPO valuation discounts reflect both illiquidity (typically 15–30% discount to expected IPO price) and uncertainty of listing timeline. Companies that pre-file confidentially (the route used by PhonePe and Zepto) can test institutional demand without public disclosure pressure, enabling more orderly price discovery.
India’s IPO grey market is an informal, over-the-counter network where IPO-bound (and other unlisted) company shares are traded between individuals, unregistered brokers, and platforms such as Planify, UnlistedZone, and Sharescart. Pricing is driven by the Grey Market Premium (GMP) — the amount above the expected IPO price that buyers are willing to pay — which acts as a proxy for expected listing-day gain.
For the NSE alone, grey market prices exceeded ₹4,500 per share by mid-2025, up from ₹3,000 at the start of 2024. Groww’s unlisted shares traded at approximately ₹2,308 in the grey market as of July 2025. These prices reflect sentiment and speculation rather than audited fundamentals — creating significant valuation risk if listing conditions change.
SEBI Chairman Tuhin Kanta Pandey proposed in August 2025 a regulated ‘when-listed’ trading platform, to be developed in partnership with stock exchanges. This platform would allow investors to trade IPO shares in the window between T+1 (allotment) and T+3 (official listing), bringing these transactions under formal SEBI supervision with transparent pricing and defined safeguards. Private platforms like Precize and Stockify already offer informal equivalents, but SEBI’s version would be the first officially regulated framework.
The expected launch of this platform in 2026 would be a landmark regulatory development — analogous to the formalization of the AIM market in UK or the expansion of the NASDAQ pre-market — and would materially improve price transparency for pre-IPO investors, potentially reducing the speculative GMP premium that currently characterises grey market trading.
India’s regulatory environment for pre-IPO and IPO market activity has undergone the most significant reform cycle in a decade, driven by the scale of the IPO boom, retail investor participation, and systemic risks identified by SEBI. The timeline below captures the key interventions.
| Date | Regulatory Event | Impact on Pre-IPO Market |
|---|---|---|
| Budget 2024 | Angel tax abolished for all unlisted cos (effective Apr 2025) | Removed major friction for early-stage startup funding; removed deterrent for foreign angels |
| Oct 2025 | SEBI bars mutual funds from pre-IPO placements | Reduces institutional validation pool; raises prices for remaining HNI/AIF investors |
| Aug 2025 | SEBI Chairman proposes regulated ‘when-listed’ platform | Would formalise grey market window between allotment (T+1) and listing (T+3) |
| Nov 2025 | SEBI consultation on pre-IPO lock-in flexibility | Allows ‘non-transferable’ marking instead of hard depository tagging; eases compliance |
| Sep 2025 | SEBI strengthens DRHP disclosure norms | Sharper risk/financial disclosures benefit pre-IPO due diligence quality |
| Jan 2025 | SEBI clarifies confidential pre-filing route | Companies can submit DRHPs without public disclosure during initial SEBI review |
| 2025 ongoing | NSE regulatory settlement (₹1,400 Cr to SEBI) | Cleared co-location / dark fibre case; removes primary blocker for NSE IPO |
| Apr 2026 | SEBI expected ‘when-listed’ platform launch | Would bring first regulated pre-IPO trading window for retail and institutional investors |
The abolition of Angel Tax (Budget 2024, effective April 2025) is particularly significant for early-stage pre-IPO investing. Previously, Indian startups receiving investment at above-fair-value were subject to tax on the excess — a provision that discouraged foreign angel and VC investment. Its removal materially reduces friction for international investors entering Indian startups in early rounds, which feeds through to richer pre-IPO pipelines.
SEBI’s growing assertiveness is a double-edged sword. On one hand, stricter disclosure norms (September 2025), lock-in reforms (November 2025), and the MF pre-IPO ban protect retail investors and improve market integrity. On the other, they reduce the depth of the institutional investor base and may create near-term pricing pressure for pre-IPO issuers. The net effect is a more professionalized, if slightly thinner, capital market.
India’s economy continues to grow at approximately 6.5% GDP in FY2026, making it the fastest-growing major economy globally. This underpins domestic consumer spending, digital adoption, and capital market depth. Equity mutual fund SIP flows have crossed ₹20,000 crore per month — creating a large, steady domestic demand base for public equity that directly supports IPO pricing and listing stability. FII flows, however, are more volatile: nearly ₹3.5 lakh crore of net FII outflows occurred in Q1 2026, driven by global risk-off sentiment linked to US-Iran tensions.
A structural tailwind for Indian IPO activity is the accelerating ‘reverse flip’ trend, where Indian startups previously incorporated in the US or Singapore redomicile back to India for public market access. Razorpay completed its reverse flip in May 2025 by merging its US parent with its Indian entity. PhonePe had redomiciled in late 2022. This trend reflects both the depth of Indian capital markets and founders’ recognition that domestic retail investor demand and Nifty/Sensex benchmark inclusion provide superior long-term liquidity.
Japanese financial institutions emerged as one of the most significant new inbound investors in Indian financial assets in 2025. Mitsubishi UFJ Financial Group’s $4.4 billion investment in Shriram Finance and Sumitomo Mitsui Banking Corporation’s $1.6 billion stake in YES Bank signal a structural reallocation of Japanese capital from China toward India. This trend is expected to extend to strategic stakes in pre-IPO fintech and financial services businesses in 2026.
India’s GCC market — where global multinationals establish captive technology and service centres — exceeded $70 billion in value in 2025, driven by geopolitical China-plus-one strategies. GCC growth both supports the Indian tech talent ecosystem (fuelling startup formation and IPO pipelines) and creates direct M&A and pre-IPO investment opportunities in GCC-adjacent software and services companies.
A sobering macro signal is the underperformance of the 2025 startup IPO cohort. With 55% of 2025 listings now trading below issue price, public market investors have delivered a clear message: topline growth without operational discipline no longer commands premium valuations. Companies that aggressively priced their IPOs at the top of valuation bands — leaving no margin of safety — have suffered the steepest declines. The knock-on effect for pre-IPO markets is significant: investors are applying more stringent valuation discipline in pre-IPO rounds, preferring companies with improving unit economics, clear profitability pathways, and evidence of capital efficiency.
The 2026 pre-IPO market enters the year with a combination of structural opportunity and recalibrated risk. The unicorn IPO pipeline is the largest in Indian history by value, domestic investor depth has never been greater, and regulatory reform is improving market infrastructure. At the same time, global macro uncertainty, post-2025 listing underperformance, and the MF pre-IPO exclusion create genuine headwinds.
| Period | Market Tone | Key Drivers & Risks |
|---|---|---|
| H1 2026 | Cautiously positive | SEBI ‘when-listed’ platform expected; mega IPO filings (PhonePe, SBI MF); FII outflows risk on US-Iran tensions |
| Q2–Q3 2026 | Accelerating | NSE IPO likely; Zepto, Razorpay window; India GDP 6.5%+ supports market sentiment |
| H2 2026 | Strong if macro holds | Flipkart DRHP possible; PE exits accelerate; pre-IPO fund launches expected to increase |
| FY26–27 outlook | Structural bull case | ₹50,000+ Cr in unicorn IPOs; domestic SIP flows underpin demand; AI/EV sectors lead |
This report is prepared for informational and research purposes only and does not constitute financial, legal, investment, or regulatory advice. Pre-IPO investments are illiquid, high-risk, and suitable only for sophisticated investors who have received appropriate professional advice. All valuations are indicative estimates based on publicly available market data; actual terms will vary. SEBI regulations govern all securities investments in India.
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