Indian family offices are increasingly moving beyond listed equities and traditional private-market funds to invest directly in companies before they go public. The shift is being driven by a search for additional sources of alpha, larger investment opportunities and earlier access to businesses with strong growth prospects. Recent transactions involving SBI Funds Management and other major IPO candidates highlight the growing role of family offices in India’s pre-IPO market.
The trend comes at a time when easy listing gains have become harder to capture. Average IPO listing gains reportedly declined from 28% in FY25 to 8% in FY26, even as India’s primary market remained active. Against this backdrop, family offices are increasingly seeking value before the public-market debut rather than relying solely on post-listing appreciation.
Indian Family Offices Expand Into Pre-IPO Deals
Family offices, which manage the wealth of India’s affluent business families, have traditionally invested heavily in listed stocks, private equity, venture capital and other asset classes. Their growing participation in pre-IPO placements represents a further move toward direct private-market investing.
PI Opportunities Fund, backed by Azim Premji’s family office Premji Invest, and Alrox Enterprises, the family office of the promoters of Sun Pharmaceutical Industries, were among investors that participated in SBI Funds Management’s pre-IPO round. Earlier, family offices associated with Azim Premji and Rakesh Jhunjhunwala participated as anchor investors ahead of the IPO of ICICI Prudential Asset Management Company.
The attraction is partly related to the size of these transactions. Family offices generally have the financial capacity to write larger checks than many individual high-net-worth or retail investors, while also having the resources to conduct extensive due diligence on private companies.
Family Office Growth Supports The Shift
India’s family-office ecosystem has expanded substantially in recent years. Industry estimates cited in recent reports put the number of family offices at more than 300, compared with roughly 45 in 2018. Their assets are also projected to increase by about 50% over the next three years.
| Indicator | Earlier Level | Current/Projected Level |
|---|---|---|
| Indian family offices | ~45 in 2018 | 300+ |
| Family-office assets | — | ~1.5x projected growth over 3 years |
| Average IPO listing gain | 28% in FY25 | 8% in FY26 |
| Investment focus | Listed markets | Listed + private + pre-IPO |
The expansion means family offices increasingly have both the capital and institutional infrastructure required to evaluate less-liquid investments.
SBI Funds Management Deal Shows Growing Appetite
SBI Funds Management became a prominent example of the trend after raising ₹1,655 crore through a pre-IPO placement in July. State Bank of India sold a 1.42% stake to 30 investors at ₹574 per share, the upper end of the company’s IPO price band.
The transaction included family offices and institutional investors. PI Opportunities Fund and Akash Manek Bhanshali were among the largest participants, with each acquiring shares worth ₹200 crore. Prashant Jain-backed 3P India Equity Fund acquired shares worth ₹150 crore.
SBI Funds Pre-IPO Placement At A Glance
| Particular | Detail |
|---|---|
| Pre-IPO amount raised | ₹1,655 crore |
| Investors | 30 |
| Shares sold by SBI | 2.88 crore |
| Stake sold by SBI | 1.42% |
| Price per share | ₹574 |
| PI Opportunities Fund investment | ₹200 crore |
| Akash Manek Bhanshali investment | ₹200 crore |
| 3P India Equity Fund investment | ₹150 crore |
| Revised SBI Funds IPO size | ~₹9,813 crore |
The pre-IPO placement reduced SBI Funds Management’s planned IPO size from about ₹11,693 crore to roughly ₹9,813 crore. The IPO itself was structured entirely as an offer for sale, meaning the company would not receive fresh capital from the public issue.
Why Family Offices Are Choosing Pre-IPO Investments
The central attraction is the opportunity to enter a company before it becomes widely accessible through public markets.
A successful pre-IPO investment can provide exposure to a company’s growth during the transition from private to public ownership. Investors may benefit if the company’s earnings expand and its valuation rises after listing. However, the strategy requires considerably more analysis than simply buying a listed stock.
According to Riddhiman Jain of Waterfield Advisors, pre-IPO and unlisted transactions can require sizeable checks, making family offices particularly well suited to the segment. Such investors can also conduct deeper due diligence because private-market investments can remain illiquid for extended periods.
The Investment Case Is Changing
The traditional pre-IPO strategy was relatively straightforward: buy a promising private company, wait for an IPO and potentially benefit from a valuation increase. Recent market conditions suggest that this approach is becoming less automatic.
Reports indicate that trading volumes in India’s unlisted market fell 40%-70% from late-2025 peaks, while average IPO listing gains dropped sharply in FY26. That means investors can no longer assume that an IPO itself will generate substantial short-term returns.
A more selective approach is therefore emerging, with investors focusing on companies where private-market valuations may still underestimate future earnings potential.
From Passive Wealth Preservation To Active Investing
The growth of India’s family-office industry is also changing how wealthy families approach capital management.
Rather than relying mainly on preserving inherited wealth, newer family offices increasingly operate with professional investment teams and broader mandates. They are investing directly in startups, unlisted growth companies and co-investments alongside private-equity and venture-capital firms.
This provides family offices with access to businesses earlier in their growth cycle and allows them to build relationships with company founders and management teams before a public listing.
The trend also gives family offices greater control over portfolio construction. Instead of obtaining private-market exposure only through a fund manager, they can select individual opportunities that fit their investment thesis.
Risks Remain Significant
Pre-IPO investing can offer attractive returns, but it also carries risks that are less pronounced in listed markets.
Liquidity is one of the biggest concerns. Shares purchased before an IPO may not have an immediate exit route if the listing is delayed or market conditions deteriorate. Investors can also face valuation risk because private-company prices may be based on limited transactions and optimistic growth assumptions.
A company may also postpone its IPO, change its planned issue size or list at a valuation below the level implied by private-market transactions.
| Key Risk | Potential Impact |
|---|---|
| Illiquidity | Capital can remain locked in for longer |
| IPO delay | Expected exit may be postponed |
| Valuation correction | Private shares can fall before listing |
| Weak listing | Expected gains may not materialize |
| Business execution | Growth assumptions may prove incorrect |
| Market volatility | IPO valuations can change rapidly |
These risks make due diligence particularly important. Family offices need to assess not only the company’s current financial performance but also its competitive position, governance, valuation, capital requirements and realistic IPO prospects.
IPO Market Conditions Are Encouraging Selectivity
The decline in average listing gains has made the public-market exit less predictable. In FY25, average listing gains were reported at 28%, but that figure dropped to 8% in FY26.
Average IPO Listing Gains
FY25 28% ████████████████████████████
FY26 8% ████████
Change: -20 percentage points
The shift does not necessarily mean family offices are abandoning IPO-related investing. Instead, it suggests that investors are becoming more focused on the underlying quality of businesses and the valuation at which they enter.
For family offices, the objective is increasingly to identify businesses that can compound earnings over several years rather than simply generate a quick listing-day gain.
The Broader Private-Market Opportunity
SBI Funds Management is only one example of a broader movement. Recent family-office investments have included companies approaching potential public listings, giving wealthy investors exposure to businesses during an important stage of their development. A February Julius Baer note, for example, highlighted Patni Family Office’s investment in Bombay Shaving Company, which has been reported as targeting a public listing within 18-24 months.
The growing involvement of family offices also provides companies with another source of sophisticated capital before an IPO. Such investors can potentially bring more than money, including business networks, strategic expertise and credibility ahead of a public offering.
The Bigger Picture
Indian family offices are becoming a more influential force in the country’s private and pre-IPO investment ecosystem. Their growing numbers, expanding assets and ability to commit substantial capital are allowing them to participate in transactions that were previously dominated by institutional investors, private-equity firms and venture-capital funds.
The shift also reflects a changing investment environment. With IPO listing gains becoming less dependable, family offices are increasingly looking for value before companies reach the stock market. The strategy offers access to potential long-term growth, but it also requires disciplined valuation analysis, patience and a willingness to accept illiquidity.
Looking Ahead
The participation of prominent family offices in SBI Funds Management and other pre-IPO transactions is likely to encourage more wealthy investors to explore private-market opportunities. As India’s family-office ecosystem becomes more professionalized, direct investments and co-investments alongside institutional funds could become a larger component of portfolios.
However, the next phase of pre-IPO investing is likely to be more selective. Falling listing gains and weaker unlisted-market liquidity mean that simply buying a company ahead of its IPO may no longer be enough. Family offices will increasingly need to identify businesses with sustainable earnings potential, sensible entry valuations and credible paths to public-market value creation.
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