Ways to Raise Capital in India: IPOs, QIPs & Private Equity Explained
When you look at the Indian markets today, one thing you will notice, companies aren’t just building businesses. They’re constantly raising capital to grow, expand, deleverage, or unlock value. And unlike earlier times, there isn’t just one route anymore. From public offerings to PE funding, companies have a full capital-raising toolkit.
In this blog, let’s walk through the many ways to raise capital in India, how founders raise capital and why different capital raising methods suit different stages of growth.
Why Do Companies Raise Capital?
Before getting into the routes, let’s address the main question, businesses raise capital to:
- Expand capacity
- Invest in technology or R&D
- For acquisition
- Reduce debt
- Strengthen working capital
- Enter new markets
What Are the Different Ways to Raise Capital in India?
Here are some of the most popular ways through which founders raise capital in India today.
Merchant Banking — The Unsung Hero Behind Every Fundraising
Every successful fundraising for businesses in India involves one crucial partner, the Merchant Banker. These financial experts act as backbone of financial services for companies while helping them structure, manage, and execute their fundraising process.
Merchant banks assist companies in:
- Preparing detailed offer documents and regulatory filings.
- Liaising with SEBI, stock exchanges, and other authorities.
- Evaluating valuations and advising on timing for market entry.
- Managing book-building and investor marketing for IPOs or QIPs.
Merchant banking ensures the capital raising journey runs smoothly, from due diligence to post-listing compliance.
Source: Investopedia
Example: ICICI Prudential AMC, which had earlier appointed a record 18 merchant bankers for its ₹10,000 Cr IPO, the highest for any Indian public issue in recent times.
Public Offerings
The most visible and celebrated capital raising method is the public offering route. When companies go public, they invite retail and institutional investors to buy shares through an Initial Public Offering (IPO).
Advantages of IPOs include:
- Access to large pools of capital.
- Improved transparency and governance.
- Liquidity for early investors and employees.
- Gain visibility & improve credibility
But IPOs also require strong disclosures, compliance, governance and performance history. Investors scrutinize these disclosures closely, often analysing stock fundamentals and market trends before committing capital. Which is why Merchant Banking teams play a key role in valuation, pricing, and investor communication.
And not every IPO issues fresh shares. Sometimes promoters or early investors sell part of their stake. That is called an OFS meaning Offer for Sale where the proceeds go to selling shareholders, not the company.
Example: Hyundai Motor India raised around ₹27,870 Cr, making it the largest IPO in Indian history. It has overtaken LIC’s earlier record IPO of ~₹21,000 Cr, setting a new milestone in the Indian primary market.
Private Placements vs IPOs
When evaluating private placement vs IPO, the key difference lies in audience and intent.
- Private placement means raising money privately from a select group of investors, often high-net-worth individuals, institutional investors, private funds or through structured alternative investment funds.
- IPO, on the other hand, involves public invitation where anyone can participate through stock exchange.
Private placements are less time intensive and maintain confidentiality while IPOs enhance public prestige & liquidity.
QIPs Explained — The Institutional Shortcut
After the IPO, Qualified Institutional Placements (QIPs) continued to dominate the equity fundraising in India. In this method, a listed company issues new shares only to qualified institutional investors like mutual funds, banks, insurers, or FIIs. The company raises equity without going through the lengthy public issue process.
QIPs are popular because they are:
- Quicker to execute than public issues.
- Cost-efficient due to fewer regulatory hurdles.
- Targeted towards sophisticated investors.
QIPs have become part of Indian companies' fundraising strategies for expansion or deleveraging.
Example: SBI raised ₹25,000 crore in July 2025 through India’s largest-ever QIP, surpassing Coal India’s previous record from 2015.
Rights Issues Explained — Rewarding Existing Shareholders
The company offers existing shareholders the right to buy additional shares usually at a discount. This protects current investors from dilution and lets them participate in the company's growth.
Rights issues are a form of fundraising for businesses where companies give existing investors the first chance to buy new shares while helping them maintain their ownership while the company raises fresh capital.
Example: Reliance Industries, India’s largest listed company by market capitalisation, completed the country’s biggest-ever rights issue of ₹53,125 crore in 2020, marking the company’s first rights issue in nearly three decades.
Private Equity (PE) Funding — Fuel for Growth Companies
Private equity funding is another way to raise capital in India. It happens when institutional investors buy a significant stake in a private or listed company to support growth.
Private equity firms also bring strategy, global expertise and operational discipline. For many businesses, especially mid-market firms, this is one of the smartest ways to raise capital in India.
Founders looking for how to raise capital without going public often find PE funding attractive, as it allows them to focus on long-term growth over quarterly earnings pressures.
Conclusion
Now you have a clear picture of the different ways to raise capital in India. Today, companies don’t depend on just one source of funding. They tap IPOs, QIPs, rights issues, private equity and other capital raising routes based on what suits their growth plans. This flexibility has helped businesses expand, deleverage, invest in technology, scale faster and stay competitive in a rapidly evolving market.
FAQs
- What are the main ways to raise capital in India?
Companies raise capital through IPOs, OFS, Rights Issues, QIPs, Private Placements and Private Equity funding. Each serves different business needs and investor profiles. - What is the difference between an IPO and a private placement?
An IPO invites the general public to invest while private placement targets select institutional or high-net-worth investors, offering more control & confidentiality. - How do rights issues work for shareholders?
In rights issue, existing shareholders get the right (not obligation) to buy additional shares at a discount, maintaining their ownership proportion in the company. - What role do merchant bankers play in capital raising?
Merchant bankers guide companies through valuation, documentation, regulatory approvals & investor roadshows while ensuring smooth execution of public or private fundraising.
Related Reading Context
- "Understand the strategic role of financial advisors in managing regulatory frameworks and maximizing valuation."
Merchant Banking Services - "Deep dive into the private investment vehicles that drive non-public capital raising in India."
Guide to Alternative Investment Funds (AIFs) - "Learn the metrics and methodologies investors use to evaluate companies during public and private offerings."
Analyzing Stock Fundamentals
Disclaimer
The strategies discussed are for educational purposes only. Past performance is not indicative of future results. Trading involves risk of loss. Trading in securities, derivatives, or other financial instruments carries significant risk. Consult a financial advisor before making any decisions. This content is not an offer, recommendation, or solicitation for any product/service. For tailored advice, consult a SEBI-registered Investment adviser.
