Pre-IPO Investment Activity Slows Amid Iran Conflict Pipeline Disruption and Heightened Caution Among High-Net-Worth Individuals

Pre-IPO Investments Slow Sharply as West Asia Conflict Disrupts IPO Pipeline

Pre-IPO investments by high net-worth individuals (HNIs) and family offices have slowed sharply in recent months due to the volatility triggered by the West Asia conflict. This disruption has disrupted the IPO pipeline and delayed exits, leading to a slowdown in primary market activity.

Wealth managers have reported that the slowdown in primary market activity has directly hit demand for pre-IPO opportunities, with investors turning cautious amid uncertain listing timelines and muted return visibility. Data from primary market tracker Prime Database shows that while 18 IPOs were launched in the January-March quarter in 2026, the month of April has witnessed only one, fintech lender Onemi Technology Solutions, which opens for subscription on April 30.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Some recent examples of IPO-bound companies which raised pre-IPO funding from family offices and HNIs include Hero Fincorp, which raised Rs 260 crore in June 2025, and Gaja Capital, which raised Rs 125 crore, also in June. Apart from direct investments, a significant portion of family offices and HNI pre-IPO investments comes through dedicated pre-IPO funds or crossover funds, which are alternative investment funds that raise domestic capital specifically to invest in pre-IPO bets.

Amit Saxena, Managing Director at Nuvama Private, stated that the pre-IPO market is directly linked to the strength of the IPO cycle. Typically, investors entering from Series D onwards look to reduce risk by investing in unlisted companies with the expectation of exiting within 12-18 months, or at most 24 months, through a public listing. For this model to work, a strong IPO market is essential and that has clearly been missing over the past 3-6 months.

The disruption has led to a visible pullback in fresh allocations, wealth managers said. Ankur Punj, MD and Business Head at Equirus Wealth, added that investors are increasingly shifting to a risk-off approach. "HNIs and Family Offices are shifting towards quality over quantity and focusing on strong underlying business metrics with clear exit strategies. Fresh allocations are being modestly scaled back or deferred," said Punj.

Capital locked in as exits get delayed

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

The slowdown in IPO activity has also led to capital getting locked in for longer periods, particularly in segments that were heavily reliant on quick listing exits. Volatility in the markets has led to lower valuation or delay in some IPOs. Many HNIs who had planned to recycle capital via a quick listing/exit strategy are now seeing money locked up for a longer duration in some cases, with timelines moving by 2-3 years longer, especially in the case of startups.

With listing timelines getting pushed and valuations under pressure, return expectations from pre-IPO investments are also being recalibrated. Ankur Punj noted that return expectations are being "downgraded or de-risked", with investors now working with longer holding periods to achieve desired internal rates of return (IRR). "Investors are now highly sensitive to entry valuation on such investments. While in 2023-24 HNIs targeted 20-30% IRR from such investments with a time horizon of 18-24 months, now the expectations have tapered to 18-24% IRR with time horizon of 3-5 years," said Punj.

Shift towards liquidity, rise of secondary deals

As uncertainty persists, HNIs and family offices are actively rebalancing portfolios towards more liquid and predictable assets. Equirus' Punj said investors are adding liquidity cushions by increasing allocations to predictable yield investments. While they are maintaining allocation to Private market, the number has dropped from 25-30% portfolio allocation to 10-15% weight in their portfolios. Investors are still maintaining their Equity allocation by moving from Pre IPO or unlisted part of portfolios to large cap listed equities.

Amid liquidity concerns, the secondary market sales are emerging as an alternative route for liquidity. One notable trend over the past six months has been the rise of secondary transactions. For companies that are IPO-ready but facing delays, investors are increasingly opting for secondary exits at a 5–10% discount. This secondary market is evolving rapidly and providing an alternative liquidity route for HNIs and family offices.

However, despite the prevailing macro environment, wealth managers are optimistic that the current lull will be temporary and expect a recovery in the IPO and pre-IPO markets in the second half of the calendar year. "Overall, the current slowdown in the pre-IPO market appears to be a short-term phase. If geopolitical conditions stabilise, we expect IPO activity, and consequently pre-IPO investments, to revive over the next 3 to 6 months, potentially by the festive season of 2026," said Saxena.