What Backtesting 26 Indian IPOs Taught Us

Why holding through the listing line unlocks the true alpha of late-stage investing

Dear Reader,

This newsletter is about backtesting.

If you trade public equities or run a quant fund (here’s wishing), backtesting is your bread and butter. You take a strategy, run it against decades of clean, timestamped historical data, and ask a simple question:

“If I had followed this rule in the past, would I have made money?”

In public markets, you can test a strategy over a weekend. In private markets, tracking historical data is notoriously difficult.

But at Oister, we are obsessed with borrowing discipline from the public markets. We wanted to see if the core thesis driving our late-stage investment strategy actually holds water.

We already do some of this. As you may have seen, our benchmarking work with CRISIL tracking private market Category II AIFs over the last decade shows that private funds have materially outperformed public markets. Across the last seven benchmarking cycles, equity AIFs delivered an average alpha of ~8.7% over the BSE Sensex TRI.

But we wanted to go further. At Oister, we do secondaries. We spend a lot of time looking at late-stage companies, the ones that are 18 to 36 months away from an IPO. And the core belief that drives a lot of what we do is this: if you enter these companies in that window, and hold them for at least a year post-listing, you capture superior, asymmetric returns.

So we took a shot at it.

The Dataset: What we looked at

We tracked 26 VC/PE backed companies that launched mainboard IPOs on the BSE or NSE and have at least a year of trading history. There were no sector or return filters. You will recognize pretty much every name: Zomato, Nykaa, Paytm, Swiggy, PolicyBazaar, and Mamaearth.

For each one, we mapped three specific milestones:

• the valuation 2-3 years before the IPO,
• the market cap at listing,
• and where the stock settled one to two years later.

One honest caveat before we dive into the data: Every company in this dataset successfully made it to the public markets. The dozens of companies that stalled, withdrew, or failed to list aren’t here. Thiis is the story of 26 startups that IPOed in the last 3-4 years

Here is what the data revealed and why it surprised us.

The Arc of Value Creation

We tracked value creation across three moments: the pre-IPO valuation (last institutional funding round, typically 24–36 months before listing), the IPO market cap at listing, and the post-listing market cap 12–24 months after. The 1.87x MOIC reflects the median return if you exited at IPO. The 2.80x reflects the median if you held through the post-listing period.

Exit at IPO vs. Hold Post-IPO: The Median Story

Median MOIC across 26 VC/PE-backed Indian companies that listed on mainboard exchanges between 2018–2025. Pre-IPO valuation = last institutional funding round. Post-IPO = market cap 12–24 months after listing date.

The Premium on Time

The high-level data completely validates the strategy.

• The Return: The median Multiple on Invested Capital (MOIC) from the pre-IPO round to 1–2 years post-listing was 2.83x, translating to a 24.6% IRR.
• The Benchmark: Over the same period, the Nifty 50 delivered around 14–15%. The middle-of-the-pack company in our dataset comfortably doubled the public market’s performance.

More importantly, the data completely dismantles a favorite playbook of impatient investors: buying pre-IPO, riding the listing pop, and flipping on Day 1.

If you flipped on day one, your median return dropped to 1.87x. By failing to hold, you left an entire turn of capital on the table. And here’s the nuance worth sitting with: the IRR is nearly identical, 24.8% versus 24.6%. So if you exited at IPO, you weren’t wrong on rate of return. You were just wrong on absolute wealth created. Same annual engine. The hold just kept it running longer.

In fact, 19 out of 26 companies explicitly rewarded patience.

For the vast majority, the IPO listing was barely the halfway mark where earnings maturity and market re-rating finally kicked in. And not the finish line.

The Catch: Extreme Dispersion

Hiding behind that beautiful 2.83x median is an uncomfortable truth: extreme return dispersion. Late-stage Indian tech investing is characterized by a few spectacular breakout winners, a handful of punishing casualties, and a very quiet middle.

The key learning for us has been that individual company selection at the pre-IPO stage is inherently difficult, with outcomes often driven by factors that are hard to underwrite consistently in advance. The biggest, most institutionally backed “consensus bets” frequently underperformed, while unassuming, quieter businesses blindsided the market on the upside.

If individual winners are impossible to forecast with absolute certainty, how do you capture that highly lucrative 2.83x median?

The golden rule of private markets applies here: Concentration is the enemy. Diversification is the alpha. The investors who win don’t try to guess the single winning horse; they own enough of the basket to ensure that when an outlier hits, they hold the ticket.

Here’s the Blindspot : Good Structures

Even if you get the diversification right, investors run into a structural problem the data can’t show you: forced early exits.

The data can’t show you the fund that matured in year four and was forced to sell Nykaa at ₹60 to return capital to LPs, right before the stock took off. Most investors don’t exit early because they want to; they exit because their fund structures dictate it.

When fixed fund timelines end or LPs demand distributions, perfectly good investments get crystallized at a 1.87x listing return, leaving the 2.83x post-listing compounding on the table.

This leaves late-stage investors facing two distinct roadblocks:

1. Concentration Risk: Not owning enough of the basket to catch the outliers.
2. Structural Impatience: Being forced to sell too early due to rigid fund timelines.

Secondaries as a Liquidity and Structure Valve

This is where we feel that the secondary market steps in. (Full disclosure: This is what we do at Oister, so feel free to weigh our bias accordingly).

A secondary transaction acts as a relief valve. It allows an early investor who needs liquidity to exit cleanly, while a secondary buyer enters at a price that reflects current, grounded realities rather than historical hype.

Because secondary buyers enter later in the cycle, they operate on a refreshed, cleaner timeline. They aren’t constrained by a legacy fund structure raised years prior, meaning they have the structural patience required to hold the position for the full 1 to 2 years post-listing that the data rewards.

Risk-Return Profiles of Private Market Asset Classes (Global Data)¹

India’s secondary landscape is growing exceptionally strong, scaling from a peripheral option into a mature, institutional liquidity channel, with average deal sizes surging 3.7x since FY20 to reach ₹8.39 billion. The acceleration is now so rapid that the H1 FY26 deal value (~₹361 billion) has already nearly matched the entirety of FY25 (~₹377 billion). Source

This volume is paving the way for institutional vehicle designs that explicitly build diversification into the strategy from day one, something UHNIs, HNIs, and family offices are actively prioritizing.

At Oister, we are already managing our third secondary fund in just two years, with over ₹1,000 crores deployed. We are seeing a fast-maturing market where domestic capital can finally access late-stage compounding systematically.

So what’s the takeaway?

The laws of market gravity remain undefeated. If you want to capture true value in late-stage tech, two non-negotiable rules apply: Diversify your exposure, and have the patience to hold.

Secondaries are fast becoming the natural entry point to execute this playbook, offering a way to acquire a diversified portfolio with the structural patience required to let the full arc of compounding do its work.

The backtest simply proved what we already believed.

Thank you, and see you next month.

Jai Hind

Please note:
Oister Proprietary Research. Data sourced from Tracxn, and public filings. We’ve tried to be as accurate and honest as possible, including about the limitations. This is not investment advice. It’s us trying to understand our own market a little better, and sharing what we found.

Chief Brand & Investor Relations Officer

Sneha Dadrwal

Frequently Asked Questions

Q: What is the median return for pre-IPO investors in Indian new-age companies?

A: Based on Oister's proprietary analysis of 26 VC and PE-backed Indian companies that listed between 2018 and 2025, the median MOIC for investors who held through 1-2 years post-listing was 2.83x, translating to a 24.6% IRR. Investors who exited at IPO earned a median of 1.87x at a 24.8% IRR.

Q: Is it better to exit at IPO or hold post-listing in Indian private markets?

A: Oister's backtesting of 26 Indian mainboard IPOs shows that holding post-listing was the better strategy for 19 out of 26 companies. The median MOIC for holders was 2.83x versus 1.87x for those who exited on listing day. The IRR is nearly identical, meaning patience simply keeps the compounding clock running longer rather than delivering a faster annual return.

Q: What is the role of diversification in late-stage private market investing in India?

A: Returns in late-stage Indian private markets are highly concentrated. A small number of companies generate the majority of value, and individual winners are difficult to predict in advance. Oister's analysis shows that investors who captured the median 2.83x return did so by owning a broad enough basket to participate in outlier outcomes, not by picking individual winners correctly.

Q: What is a secondary fund and how does it work in Indian private markets?

A: A secondary fund purchases existing stakes in private companies from early investors who need liquidity before an IPO or other exit event. Secondary buyers enter at a price reflecting current business realities rather than historical hype, and with a fresh holding period unconstrained by legacy fund timelines. In India, secondary deal volumes have grown sharply, with H1 FY26 deal value nearly matching the entirety of FY25.

Q: Why do private market investors exit too early and how can they avoid it?

A: Most early exits in private markets are structural rather than intentional. When fund timelines end or LPs require distributions, investors are forced to crystallise returns at listing rather than holding through the post-IPO compounding period where Oister's data shows the most meaningful value creation occurs. Secondary funds address this by providing liquidity to early investors while allowing incoming capital to hold for the full arc.

Q: How does pre-IPO investing in India compare to public market returns?

A: Oister's analysis of 26 Indian new-age IPOs between 2018 and 2025 shows a median IRR of 24.6% for pre-IPO investors who held post-listing, compared to approximately 14-15% annual returns from the Nifty 50 over the same period. Even net of typical secondary fund fees, the IRR of approximately 18-19% remains meaningfully above public market benchmarks.

Q: What is backtesting and can it be applied to private markets?

A: Backtesting is the practice of applying an investment strategy to historical data to assess whether it would have generated returns. While common in public markets due to the availability of clean, timestamped price data, it has historically been difficult to apply in private markets. Oister's IPO Index represents one of the first systematic attempts to backtest a late-stage private market strategy in India using verified pre-IPO valuation data from Tracxn and post-listing market capitalisation data from public exchanges.

Sources

• Preqin data analysed by Coller Capital, January 2025. Data includes all relevant funds with vintage years between 2004-2023 with performance data, (as reported by Preqin). https://secondariesinstitute.collercapital.com/syllabus/introduction-to-private-equity-secondaries/
• Jefferies Global Secondary Market Review January 2025
• Bain Asia-Pacific Private Equity Report 2025
• India PE and VC Exit Landscape: A Tale of Two Halves. Houlihan Lokey, 2025. https://cdn.hl.com/pdf/2025/india-pe-vc-exit-landscape-tale-of-two-halves.pdf