Six and a half hours was all it took for LG Electronics India Ltd.’s $1.3 billion initial public offering to sell out on 7 October 2025.
The rapid subscription marked the fastest for a major Indian IPO in 17 years and highlighted a new reality: India’s capital market is increasingly powered by its own people.
A Bloomberg report states that domestic investors have turned the country into one of the busiest IPO destinations worldwide, driving record fundraising and reshaping how capital is raised.
Local money replaces foreign dominance
LG’s IPO, the third-largest in India this year, reflects a structural shift in who funds new listings.
India is approaching last year’s $21 billion record in total proceeds, but the real story lies in where the money comes from.
According to Prime Database figures cited by the report, domestic investors have poured 979 billion rupees into IPOs since early 2024, compared with 790 billion rupees from foreign funds.
Local participation now accounts for nearly 75% of all IPO investments, the highest ever for any year with proceeds above 1 trillion rupees ($11.3 billion).
Mutual funds, insurers, and millions of retail investors have filled the space once dominated by overseas capital.
LG’s three-day share sale drew 60% of bids from domestic buyers, excluding the anchor portion.
The stock then gained 48% on debut, signalling strong local confidence in Indian equities.
Digital access and steady inflows
The transformation began during the pandemic, when millions opened demat accounts through mobile apps and started investing regularly via systematic plans.
This trend has strengthened every quarter.
Domestic institutional investors now hold 19.2% of shares in over 2,000 companies listed on the National Stock Exchange, the highest level in 25 years.
At the same time, foreign portfolio investors’ ownership has fallen to 17.3%, the lowest in more than a decade.
Even with foreign outflows of about $16 billion this year, Indian mutual funds and insurers added over $70 billion to equities.
That support has helped IPOs outperform the broader market, returning an average of 18% in 2025 against the 9.7% gain in the NSE Nifty 50 Index.
For issuers, the ability to rely on home-grown capital has made the domestic market a preferred fundraising venue.
More than 300 IPOs have raised almost $16 billion so far this year, placing India fourth globally behind Hong Kong, mainland China, and the US.
The risks of rapid growth
While investor enthusiasm has transformed the market, it has also raised concerns about sustainability.
Many smaller IPOs have been oversubscribed more than 100 times, and valuations are beginning to stretch.
Nearly half the listings on India’s main and junior boards are now trading below their offer price.
Bloomberg data show the median one-month post-listing return has dropped to 2.9% from 22% last year.
Big issues such as Tata Capital Ltd.’s $1.7 billion sale, HDB Financial Services Ltd.’s $1.5 billion deal, and the upcoming $828 million IPO of Lenskart Solutions Ltd. reflect both the strong demand and the risk of overheating.
Bankers warn that a few poorly priced debuts could trigger a correction.
Yet the pipeline remains strong, with 80 firms already approved by regulators and 121 more waiting in line.
Among them are Reliance Jio Infocomm, the National Stock Exchange of India, and Flipkart India Pvt., backed by Walmart.
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