In short
- In a fresh issue, the company gets the money. In an offer for sale (OFS), the sellers do.
- In September 2026, 75% of Indian mainboard IPO money was OFS. Jio's ₹30,188 crore IPO was 0% OFS.
- An OFS isn't bad by itself. The useful questions are who is selling, how much, and at what profit.
When an IPO “raises ₹5,000 crore”, it’s natural to imagine ₹5,000 crore going into the business. Often, most of it doesn’t.
Every IPO can have two parts, and both are sold to you at the same price, in the same application. Yet they do completely different things.
The difference, with a café
Say your friend runs a café worth ₹1 crore, owned by your friend and one early investor.
Daily life: Fresh issue: the café prints new shares and sells them to you for ₹20 lakh. That ₹20 lakh goes into the café’s bank account and could buy a new oven. The café now has more money, and everyone’s percentage shrinks a little.
Daily life: Offer for sale: the early investor sells you part of their existing stake for ₹20 lakh. The cheque goes to the investor, who walks away richer. The café has the same bank balance as yesterday and just has a new owner in the register.
You own a piece of the same café in both cases. Only in the first does the business get anything.
| Fresh issue | Offer for sale | |
|---|---|---|
| New shares created? | Yes | No |
| Who receives the money? | The company | The sellers |
| Existing holders diluted? | Yes | No |
| Company’s cash goes up? | Yes | No |
How common is each?
Very common, and that’s why the headline number misleads. SEBI’s October bulletin reports that mainboard IPOs raised a record ₹40,355 crore in September 2026, and 75% of that was OFS. Fresh capital was only 25%. So most of that record month’s money changed hands between shareholders.
Now compare one very large IPO from the following month. The cover of the Jio Platforms Prospectus shows a fresh issue of ₹30,188 crore, and under “Offer for sale size” it says “Not applicable”. Reliance, Meta and Google sold nothing in the IPO.
Is an OFS a red flag?
Not automatically. Be careful with this one, because the lazy reading is “promoters are running away”. Often it’s something quite normal:
- A private equity fund bought in years ago, and its own fund life requires it to return money to its investors.
- Founders sell a small part after decades of building, while keeping control.
- The company needs no extra cash, but it wants a listing and a public price.
The question isn’t “is there an OFS?” It’s “who is selling, how much of their stake, and what did they pay for it?”
Four things to check
1. Who are the sellers? The list of selling shareholders is in the offer document. A financial investor at the end of its fund’s life tells a different story from a promoter cutting a large stake.
2. What share of their holding is being sold? Selling 5% of your stake and selling 80% of it send quite different messages. Compare the pre-issue and post-issue tables in “Capital Structure”.
3. What did they pay? The document discloses the weighted average cost of acquisition. In Jio’s case, Reliance’s is ₹89.58 a share against an issue price of ₹1,119. Jio had no sellers, so that’s only context, but where there are sellers, it shows what profit they’re booking from your purchase.
4. What’s the fresh money for? Read “Objects of the Issue”. Jio’s plan was to use ₹27,500 crore of its net proceeds to prepay loans. Specific plans can be checked later. Vague ones are harder to hold anyone to.
A rough scorecard
Treat this as a set of prompts for further reading. It isn’t a rating of any company.
| What you see | What to ask next |
|---|---|
| Mostly fresh issue, specific objects | Is the plan realistic, and is the price fair? |
| Mostly fresh issue, large “general corporate purposes” | Why can’t they be more specific? |
| Large OFS by a financial investor | How long has it held, and at what cost? |
| Large OFS by promoters | How much do they keep, and why sell now? |
One more thing: dilution
A fresh issue creates new shares, so per-share numbers change. Jio’s share count rose from 893.9 crore to 920.9 crore, about 3%. That’s why a careful reader uses the post-issue share count when valuing a company. An OFS adds no shares, so that adjustment isn’t needed.
Next time an IPO’s size is in a headline, make this your first search in the document. It takes about a minute, and it changes how you read everything after it.
Finance fresher and NISM Series XV Research Analyst, on the PGPM at ICFAI Business School, Mumbai. I write about IPOs, filings and Indian markets. Say hello.
Disclosure
For education only. This is not investment advice or a recommendation to buy, sell or hold any security. Figures are as reported by the sources listed on the dates shown, and rules change, so check the latest offer document and SEBI regulations. Drafted with AI assistance.