Understanding confidential IPOs
Chakravarthy V
2M Impressions | Co-Founder at Prime Wealth Finserv. Helping High Net Worth Individuals with their Investment Needs QPFP®️ Qualified Personal Finance Professional®️ CWM®️ from American Academy of Financial Management
Hello readers!
Imagine it is your 25th birthday next month. You are expecting a big Diwali bonus, so you start planning a grand celebration. You picture an extravagant dinner, a fancy menu, beautiful decorations, and a long guest list. Everything seems perfectly planned in your mind.
But then Diwali comes and goes, and that “big bonus” your company hinted at never arrives. Suddenly, your party plans do not fit your budget anymore. You end up cutting down the guest list, scaling back the celebration, and hosting a smaller dinner instead. The next day, a few friends whispered about the “big bash” they were not invited to. Not exactly how you pictured your 25th birthday, right?
Now, flip that story. This time, you wait for the bonus to actually arrive before announcing anything. Once the money is in your account, you plan properly, send out invites, and organize a great evening. Everything goes smoothly, with no confusion or last-minute cancellations. The party turns out to be a huge success, and people still talk about it months later.
Obviously, the second version sounds much better. And interestingly, that is how many Indian companies are now approaching their stock market listings.
The Quiet Move Before the Spotlight
A few days ago, Infra.Market, a major player in the construction materials industry valued at around 2.8 billion US dollars (approximately ₹24,850 crore), quietly filed its draft papers for an IPO with SEBI. But here is the twist: it did it through what is known as the “confidential” or “pre-filing” route.
Usually, when a unicorn or large startup begins the IPO process, the stock market and media go into overdrive. But this time, there was barely a whisper. Only a few short news mentions appeared, each including a disclaimer stating that “pre-filing does not necessarily mean the company will go for an IPO.”
Infra.Market is not alone. Even Tata Capital, whose IPO subscription closes today, began its journey in the same quiet way. Since SEBI introduced the pre-filing route in November 2022, around 22 companies have used it. Interestingly, 18 of them have done so in 2025 alone.
So, what explains this sudden wave of silent IPO preparations?
Why Companies Are Staying Quiet
Let us go back to that birthday story for a moment. You would not announce a big party unless you were sure you could pull it off. The same logic applies to companies planning their IPOs.
Firms want to keep their IPO plans and financial details private until they are confident about the timing. If they go public with big announcements and later decide to delay or cancel, it can lead to unnecessary gossip.
Investors may begin to question the company’s financial strength, the media may speculate endlessly, and suddenly, the company’s credibility takes a hit. This makes it harder to raise funds or attract investors later.
How the Traditional IPO Process Works
In the traditional IPO route, once a company files its Draft Red Herring Prospectus (DRHP), the document becomes public for at least 21 days. During this time, anyone, including analysts, competitors, and journalists, can read it and comment on it.
After this review period, SEBI and the stock exchanges examine the document and issue an “observation letter.” The company then has up to 12 months to launch the IPO. Before doing so, it must update the DRHP with new information and publish the final version called the Red Herring Prospectus or RHP.
Here is where the problem lies. The DRHP contains highly sensitive business information such as financial performance, revenue breakdowns, and strategy details. Competitors can easily access this data, which may put the company at a disadvantage.
Protecting Sensitive Information
Take Swiggy, for example. The company opted for the confidential filing route for a specific reason. If it had filed its DRHP publicly, competitors would have gained access to detailed information about its quick commerce arm, Instamart. That would include data on order volumes, customer behavior, delivery timelines, and pricing strategies. In other words, it would have exposed Swiggy’s business playbook for all to see.
No company wants to hand over such valuable insights to its competitors, especially before it has even confirmed whether it will go ahead with the IPO.
In addition, the review process itself often draws unnecessary attention. Regulators like SEBI frequently ask for clarifications or revisions, which is a normal part of the process. However, the media tends to turn even minor changes into breaking news.
A recent example is WeWork India’s IPO. Even though the issue was fully subscribed, retail investors raised concerns about irregularities in the DRHP and SEBI’s responses. Such speculation can easily create doubt and affect investor confidence.
The Big Advantage of the Pre-Filing Route
This is where the confidential or pre-filing route stands out. When companies file their DRHP confidentially, the document remains private during SEBI’s review. Only a limited group of Qualified Institutional Buyers, such as mutual funds, banks, and large investment firms, can access it.
Once SEBI issues its observation letter, the company has up to 18 months to go public, which is six months longer than the traditional timeline. This gives companies much-needed flexibility. They can observe market conditions, assess investor sentiment, and choose the best possible time to launch.
If global tensions rise or markets become volatile, they can simply wait without facing questions or rumors. This allows them to stay in control of their narrative and reputation.
What About the Risks?
Of course, no system is perfect. The confidential filing method was first introduced in the United States in 2012. Initially, it was available only for smaller startups with annual revenues below one billion US dollars. In 2017, it was extended to all companies.
Since then, nearly 86 percent of US firms have used it. However, the system does have some risks. Since confidential filings involve several intermediaries such as regulators, lawyers, and bankers, there is always a small chance of information leaks or insider trading.
In some rare cases, regulatory employees have been accused of trading stocks of companies under review, using unpublished information. While these incidents are exceptional, they highlight the need for strong oversight and ethical controls.
The Bigger Picture
At its core, the confidential IPO route gives Indian companies something invaluable: control. It allows them to prepare quietly, safeguard their sensitive data, and choose the ideal timing for their public debut.
It is not about secrecy for the sake of it. It is about being ready before stepping into the spotlight. In a fast-paced market like India’s, where timing and trust can make or break a listing, having that control is crucial.
The confidential route ensures that when companies finally decide to go public, they do so with confidence and clarity. It gives them time to fine-tune their strategies, assess the environment, and make their debut from a position of strength.
So, the next time you hear about a company filing for an IPO quietly, remember that it is not hesitation. It is strategic preparation. It is the calm before the spotlight shines bright.
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Chakrivardhan Kuppala, Cofounder & Executive Director, wrote for Hindustan Times:
Chakravarthy V wrote for Hindustan Times:
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1wI view the surge in confidential filings as a necessary evolution towards market efficiency. The traditional public DRHP process imposed a massive, uncompensated cost via forced disclosure, especially for disruptive businesses like Swiggy. This new route corrects the governance asymmetry by allowing issuers to mitigate reputational risk until they can achieve optimal pricing discovery in a stable window.