Iran Crisis Affects High Net Worth Individuals' Liquidity Amid IPO Delays and GCC Exposure

India's Wealthy Investors Feel the Squeeze of West Asia Conflict

India's wealthy investors are facing increasing liquidity pressure due to the ongoing West Asia conflict, with delayed exits, muted IPO activity, and cautious global sentiment disrupting capital flows.

According to Akash Hariani, Joint Managing Director at Motilal Oswal Wealth Ltd, there is a noticeable increase in liquidity pressure, although it is not widespread stress at this point. Hariani states that the stress is concentrated in relatively illiquid pockets of portfolios, rather than across the board.

IPO Slowdown Contributes to Liquidity Squeeze

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One of the key factors contributing to the liquidity squeeze is the slowdown in IPO markets. A combination of volatile global cues, including the Iran conflict, and weak listing performance has delayed exits for investors who typically rely on IPO cycles for quick monetization.

The largest stress is with pre-IPO and IPO-related investments, said Hariani, adding that private market investments are also taking longer to return capital. Feroze Azeez, Joint CEO at Anand Rathi Wealth, echoed a similar view, noting that liquidity pressure is rising but remains within the bounds of normal market cycles.

| Comparison of IPO Listings Performance | | --- | --- | | 2025 Listings Trading Below Issue Price | 55% | | 2025 Listings Trading Above Issue Price | 45% |

The impact of delayed exits for pre-IPO investments on liquidity for HNIs (high net worth individuals) is becoming increasingly visible, said Hariani. Azeez added that for HNIs who entered at the pre-IPO stage, delayed exits do not necessarily mean a loss of value but it does mean capital remains tied up for longer than expected, meaning their liquidity has been pushed.

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Real Estate and GCC Exposure Add to Delays

Beyond IPOs, overseas exposure, particularly to Gulf markets, is also contributing to liquidity tightness. Motilal's Hariani said GCC-linked real estate investments, especially speculative segments like off-plan projects, are seeing delays in exits, with transaction cycles slowing and buyers taking longer to commit. However, income-generating assets continue to perform relatively well, making the stress segment-specific rather than widespread.

Anand Rathi's Azeez added that the Iran-led geopolitical tensions are affecting investor sentiment more than forcing exits. "Investors are not selling real estate assets in locations such as Dubai, but a slowdown is being seen for newer investment, which means investors are taking a more cautious approach," he said.

Leverage Becomes a Pressure Point

Another pressure point for HNI portfolios is leverage. Loans against shares or borrowing to participate in IPOs are becoming harder to manage as falling markets reduce collateral values. "As markets are put right, the portfolios that are pledged are valued lower, and it can lead to margin calls to top up the collateral requirement," said Hariani.

Shift Towards Liquidity Buffers

Despite these pressures, wealth managers said that they are not seeing any dramatic shift in asset allocation. Instead, investors are making incremental adjustments to maintain flexibility. Hariani said portfolios are seeing a gradual move towards fixed income, structured products, and higher cash holdings to manage uncertainty.

Hariani emphasized that this is more of a rebalancing exercise than a fundamental change in investment strategy. Similarly, Azeez said UHNI (ultra high net worth individual) portfolios continue to be driven by long-term allocation frameworks, typically with a majority in equities. However, there is a visible tilt towards fixed income, structured products, and multi-asset strategies to manage volatility while retaining growth exposure.

Rise of Secondary Transactions

Wealth managers pointed out that one of the most notable responses to the liquidity crunch is the rise of secondary transactions and structured exits. Hariani said there is increasing willingness among investors to sell private market holdings in secondary deals, even at a slight discount, to unlock liquidity.

Azeez added that there is a clear rise in secondary market activity, and it is becoming a practical way for UHNIs to unlock liquidity from illiquid investments. "Deal values have picked up sharply, with Rs 377 billion in FY25 and Rs 361 billion already in the first half of FY26, while average deal sizes have increased 3.7 times over five years, showing that larger, more institutional transactions are happening," he said.

Liquidity Tightness to Persist

Wealth managers expect liquidity conditions to remain slightly challenging in the near term, especially if IPO markets and exit opportunities remain subdued. Hariani said that this period of more restrictive liquidity may last some time, particularly when IPO markets and exits are slow.

Azeez, however, struck a cautiously optimistic note, saying the current tightness is cyclical rather than structural. "Most of what we are seeing is cyclical, and, in fact, some of the building blocks are improving, whether it is more reasonable public market valuations, a strong IPO pipeline, or the gradual development of secondary markets," he said.