Aniket PujariAce investor Madhusudan Kela is clear about one thing: he won’t buy into a company if a promoter is paring stake at a time when the business itself requires capital.
His comments come in a year marked by intense debate over initial public offerings (IPOs) that have been used largely as exit routes for promoters and private equity backers.
“If a promoter is taking money out at a time when the company itself needs capital, I would never touch that company,” Kela said at the Mint BFSI Conclave on 12 December.
However, he emphasized that exits are not a concern if the company does not require fresh capital, and the public issue is attractively priced. “If the promoters are ethical and the issue is done in a transparent manner, it doesn’t matter to me who is selling and who is buying.”
Kela said investors should focus on a company’s fundamentals—whether it offers growth and returns—rather than on who the buyers or sellers are in an IPO.
His remarks gain significance at a time when fund-raising through IPOs in 2025 has been dominated by offer-for-sale (OFS) issues. As of 2025, OFS accounted for nearly 63% of total IPO proceeds, according to a report by Yes Securities.
In an OFS, no new shares are issued and no money flows to the company; existing investors sell their holdings.
Over the longer period between FY15 and FY25, about 71% of IPO proceeds were attributed to OFS, compared with just 23% during FY05–15, when a larger share of the money raised went toward growth capital for companies, as per a report from Quantum Mutual Fund.
The shift highlights how IPOs have evolved — from funding future growth that benefits new investors to facilitating exits for promoters and private investors, the report added.
Kela also said that over the years, the composition of the Nifty 50 index has changed. Of the 50 companies that made up the Nifty 50 index 25 years ago, only 17 remain today, showing how leadership changes over time, he added.
Over the next decade, the Nifty 50’s composition is likely to look very different, with the possibility that the nature of IT (one of the major constituent of the index) itself changes—traditional IT companies may give way to new-age technology firms, blurring the lines of what constitutes an IT company, Kela added.
As of today, financial services account for 37% of the Nifty 50, followed by IT at 11% and oil and gas at 10.2%.
Continued inflows into small- and mid-cap funds despite weak stock performance are a sign of clarity, not confusion, Kela said. He added that retail investors who stayed invested have been the biggest wealth creators and sustained inflows into these funds reflect maturity and discipline, rather than a cause for concern.
The assets under management (AUM) for small-cap mutual fund schemes stood at ₹3.69 trillion as of November, a 13.3% increase in the last one year, as per data from Association of Mutual Funds of India (AMFI). The Nifty small-cap 250 index has lost 5.5% between November 2024 and November 2025.
On crypto
While speaking about crypto investing, Kela said, “I must honestly, candidly admit that I’m not invested in crypto.”
He was quick to add that he should have at least evaluated the space. “Forget after evaluation — if we did not participate, that was fine,” he said, adding, “But we did not even evaluate.”
He noted that the reality is starkly different today; crypto has grown into a trillion-dollar industry. So, while he didn’t allocate money to it, the takeaway for investors is clear: one should never dismiss any new asset class outright, he said.
