IPO under scrutiny: Is the IPO market becoming an exit route for promoters?

Once again, concerns are being seen in the Indian equity market regarding the intentions behind some public issues. CMR Green Technologies Ltd, which filed its draft red herring prospectus (DRHP) in September 2025, has attracted attention for reasons beyond the fundamentals of the business.

A careful reading of the DRHP reveals that despite incurring huge losses in the past years, the company will not make any profit from the IPO. Instead, the entire issue has been structured as an offer for sale (OFS), allowing the promoter group entity and existing investors to exit by selling their shares to the public. This raises a fundamental question – is the IPO route increasingly being used as a liquidity event for insiders rather than a way to raise capital for business growth?