India’s red-hot IPO market, minting $200 million an hour, mirrors China’s rise

Core Insights - LG Electronics India Ltd.'s $1.3 billion IPO was fully sold in just six-and-a-half hours, marking the fastest take-up in 17 years among major Indian IPOs, contributing to India's status as a leading IPO market globally [1][9][17] - The current IPO wave is characterized by a significant shift towards domestic investors, with local mutual funds, insurers, and retail investors dominating the market, reducing reliance on foreign funds [3][6][14] Investment Trends - Domestic investors have invested ₹97,900 crore in IPOs since the start of 2024, compared to ₹79,000 crore from foreign funds, with domestic investments accounting for nearly 75% of total IPO proceeds in 2025 [6][14] - The participation of domestic institutional investors in over 2,000 companies has increased to 19.2%, the highest in 25 years, while foreign portfolio investors' holdings have decreased to 17.3% [13] Market Dynamics - The Indian IPO market is experiencing a structural shift, with a growing number of first-time equity investors driven by mobile trading apps and social media content [10][11] - New IPOs have generated a weighted average return of 18% this year, outperforming the NSE Nifty 50 Index's 9.7% gain, despite significant foreign outflows [14][19] Future Outlook - The robust demand from local investors has made the equity market a preferred venue for issuers, with 80 firms approved for IPOs and another 121 applications filed [15][20] - Upcoming large IPOs from companies like Reliance Jio Infocomm Ltd. and Flipkart India Pvt. are anticipated to further boost the market [16][20] Valuation Concerns - Despite the current euphoria, there are concerns regarding excessive valuations and over-subscription rates, which could lead to potential corrections in the market [4][22] - Nearly half of the IPOs listed this year are underperforming, with the median return one month post-listing dropping to 2.9% from 22% last year [23][24] Regulatory Environment - A favorable regulatory backdrop is aiding the IPO market, with recent changes making it easier for large private firms to go public and relaxed loan rules for investors [28]