India's primary market has delivered an unprecedented windfall to investment bankers in 2025, with total fee earnings reaching a record ₹4,113 crore according to Prime Database. This represents a substantial increase from ₹3,463 crore earned in 2024, reflecting the robust health of the country's IPO ecosystem.

Record-Breaking Market Performance

The surge in banker compensation coincided with exceptional market activity, as total IPO fundraising climbed from ₹1.6 lakh crore in 2024 to over ₹1.75 lakh crore in 2025. More than 100 IPOs have been launched this year, comfortably surpassing the previous year's record of 91 issues.

Major IPO Deals Drive Fee Income

Several blockbuster offerings generated substantial payouts for investment banks during 2025. LG Electronics India's ₹11,605-crore IPO emerged as the year's highest fee generator, delivering ₹226 crore to its managing consortium of Morgan Stanley, Axis Capital, JP Morgan, Bank of America, and Citi.

Evolving Fee Structure

The current fee landscape represents a dramatic transformation from a decade ago, when investment banks typically earned just 1-2% on most IPOs, with large deals priced as low as 0.5-1%. Today's fee structure ranges between 1-5%, with deal complexity and size determining the exact percentage.

"Higher fee income this year is because of higher fundraising in 2025," explained Pranav Haldea, Managing Director of Prime Database Group. "Investment bankers get paid in percentage of the amount raised in IPOs. So if the issue amount is high, the payout for them would also typically be high."

According to industry data, fees for new-age tech startups command higher rates of 3-4% due to their unique market positioning and increased research requirements. For smaller IPOs of ₹200-300 crore, percentage fees tend to be higher due to minimum fee thresholds, while billion-dollar offerings typically see rates of 1-1.5%.

Market Growth Trajectory

India's IPO market has demonstrated remarkable expansion over the past decade, with mainboard IPO fundraising growing at a 29% compound annual growth rate. Average mainboard IPO sizes increased from ₹1,119 crore during 2015-2019 to ₹1,579 crore during 2020-2025, while SME IPO sizes more than doubled from ₹11 crore to ₹24 crore.

Pantomath Capital projects continued growth momentum, anticipating primary market fund mobilization of ₹3.5 to ₹4.0 lakh crore in 2026, driven by larger offerings across both mainboard and SME segments.

The Indian IPO market has witnessed a significant reality check, with almost half of the new listings trading below their issue prices, despite initial strong momentum. This trend highlights the importance of careful stock selection and thorough research before investing in newly listed companies.

IPO Market Overview

The IPO market in India has seen a flurry of activity, with 103 companies going public in 2023. However, the performance of these newly listed stocks presents a mixed picture:

Market Differentiation

Despite the challenging performance of many IPOs, the market is showing clear signs of quality differentiation. This suggests that investors are becoming more discerning, focusing on companies with strong fundamentals and growth prospects rather than getting caught up in the initial IPO hype.

Investor Implications

Careful Selection

The current market scenario underscores the need for investors to carefully evaluate each IPO on its merits, rather than assuming all new listings will perform well.

Long-term Perspective

While short-term performance may be disappointing for some IPOs, it's important for investors to maintain a long-term perspective when investing in newly listed companies.

Market Sentiment

The fact that over half of the IPOs are still trading above their issue prices indicates that there is still appetite for quality offerings in the market.

Record Fundraising

Despite the mixed performance, mainboard IPOs have raised a record ₹1.75 lakh crore, highlighting the continued importance of public markets for corporate fundraising.

Conclusion

The current state of the IPO market serves as a reminder that not all public offerings are created equal. While the IPO route remains an attractive option for companies to raise capital, investors need to be more selective and thorough in their approach to IPO investments. As the market continues to evolve, it's likely that we'll see a greater emphasis on quality and fundamentals in future listings.