IPO Market Emerged Bright Spot In 2024, Private Equity To Drive Growth In 2025: Gopal Jain

The year 2024 has been one of unpredictability, with both global and local markets experiencing fluctuations. But the performance of primary markets in India emerged as a key bright spot in the country's economy, according to Gopal Jain, managing partner of Gaja Capital. 

Jain, while speaking to NDTV Profit in a televised interview, highlighted the role of private equity and the surge in capital raising, which has led to a climb in initial public offerings and pre-IPO rounds.

"Public markets have also not delivered stellar returns. I think the highlight has been primary markets. Capital raising, which is so important for companies, is close to an all-time high," he said.

Jain noted that 2024 has seen private equity firms exit through public markets more prominently than before, marking a significant shift in the landscape. "This was the year of the big pre-IPO rounds and all of this taken together, augurs very well for the Indian market over the long term."

According to Jain, the stigma around private equity exits has diminished. "Over the last few years, private equity has emerged as a preferred supplier of companies to the public markets," he explained. He attributed this shift to the growing importance of growth, governance, and environmental, social, and governance factors in driving investments. "Most private equity companies fare relatively well on these parameters. It’s coming of age."

Jain also discussed the emerging trends within private equity that are expected to shape India's future. "Financialisation, the digitisation of the financial system, is a very strong trend, and that continues," Jain said, adding that the rise of the discretionary consumer is another driving force in the sector. "There’s a shift towards discretionary consumption, and private equity is investing in businesses built around this trend."

Looking ahead to 2025, Jain expressed hope for continued growth in primary markets and private equity. "Private equity will continue to be a preferred supplier of companies to the public markets," Jain said. "There’s been greater understanding that private equity's job is to invest and to exit."

In terms of consumption trends, Jain noted that while there has been some slowdown in sectors like apparel and e-commerce, quick commerce is gaining traction. "Quick commerce is showing growth, but that's really market share gain from e-commerce," he said. Jain attributed some of the slowdown to high-interest rates and the challenges of credit flow, which impact discretionary consumer spending.

Jain also noted the role of government and corporate capex in sustaining India's growth. "In an ideal situation, all three engines must buy: corporate capex, government spending, and retail spending," he remarked. "But in the absence of all three engines firing, the focus is on two of these engines: government spending and retail spending." He added that while private sector capex is crucial, the government can play a significant role in driving reform and spending in key areas.