The AI Investment Supercycle
Record capital flows and trillion-dollar valuations
Artificial intelligence has become the dominant destination for institutional capital in the first half of 2026, evolving from an emerging technology theme into a defining force reshaping private capital markets and influencing valuation multiples across global equities. What is particularly striking is not only the scale of valuations, but also the unprecedented speed and concentration of capital flowing into AI and adjacent frontier technologies.
OpenAI and Anthropic have been at the forefront of this investment wave. OpenAI reportedly raised approximately USD 122 billion at a post-money valuation of USD 852 billion, while Anthropic followed with a USD 65 billion Series H funding round, valuing the company at nearly USD 965 billion. The investment momentum has extended beyond private AI companies. Alphabet (Google) raised approximately USD 85 billion to accelerate investments in AI infrastructure, data centers, and next-generation AI capabilities, underscoring the scale at which established technology leaders are deploying capital to maintain their competitive edge.
Together, the three companies alone have attracted close to USD 275 billion of fresh capital.
The enthusiasm for frontier technologies is equally evident in the public markets. SpaceX completed one of the largest IPOs in history in June 2026, raising approximately USD 85.7 billion and debuting with a market capitalization of around USD 2 trillion. Collectively, these transactions illustrate the extraordinary level of investor conviction in technologies expected to define the next decade, fueling record capital deployment, trillion-dollar valuations and sustained expansion in valuation multiples across the global technology sector.
An increasingly bifurcated global equity market
This unprecedented deployment of capital has altered global equity markets. Investors are rewarding companies with direct exposure to AI infrastructure in the form of semiconductor manufacturers, advanced chip designers, hyperscale cloud providers, networking businesses and AI software platforms, with premium valuations, and in many cases price-to-earnings and revenue multiples have expanded significantly as markets price in long-term structural growth rather than near-term earnings.
The result is an increasingly bifurcated landscape. Markets with significant exposure to AI infrastructure have substantially outperformed broader global indices. Taiwan, supported by its world-leading semiconductor manufacturing ecosystem, and South Korea, with its globally competitive memory-chip and electronics industries, have emerged as some of the biggest beneficiaries of the cycle, attracting sustained investor interest as demand for AI computing accelerates, while countries such as the USA, UK, and China, have continued to deliver reasonable returns.
India presents a contrasting picture. While its long-term fundamentals remain strong, supported by robust domestic consumption, expanding manufacturing and a resilient financial sector, the listed market has relatively lower representation of companies directly linked to the global AI infrastructure value chain, such as advanced semiconductor manufacturing, chip design and hyperscale computing. As a result, Indian equities continue to be driven primarily by domestic growth fundamentals rather than experiencing the AI-led valuation re-rating seen across several developed economies and North Asian markets.
Geopolitics and India’s IPO Pipeline
Geopolitical developments reshape global capital flows
The escalation of tensions in West Asia has reshaped investor behavior across emerging markets – raising volatility, elevating energy-price risk and pushing institutions towards more defensive allocation. Rather than withdrawing, investors have turned more selective, concentrating in themes with the strongest structural growth and postponing sentiment-sensitive transactions.
In India, primary market activity has slowed as issuers and investors wait for stability before pricing large deals, while the underlying supply of quality issuers has continued to strengthen.
India’s IPO Engine Continues to Build with Marquee Names
Behind the temporary slowdown lies one of the strongest IPO pipelines India has seen in years, with Draft Red Herring Prospectus (DRHP) filings continuing to accumulate despite near-term volatility. Among the most significant developments, the National Stock Exchange (NSE) filed its DRHP in June 2026, paving the way for what is expected to become one of the largest and most closely watched public offerings in Indian capital market history.
Alongside NSE, market attention also remains firmly focused on the anticipated listing of Jio, widely expected to be one of India’s largest IPOs. While its timeline continues to be closely watched, Jio’s eventual debut is expected to attract substantial domestic and international institutional participation. Together, these marquee offerings, alongside a growing pipeline of technology-led issuers, underscore the depth and quality of India’s upcoming IPO landscape.
India’s new-age technology companies, after some of the marquee listings in 2025, have continued to prepare themselves for the public markets, with the likes of Zepto have advanced through updated DRHP (UDRHP) filings, while companies like Razorpay, Zetwerk and Cult.fit submitted their DRHPs to SEBI, reportedly targeting ₹6,000, ₹5,000 and ₹4,000 crore respectively.
The Road Ahead: ₹3.2 Lakh Crore of IPOs Await the Right Market Window
Nearly 250 companies have filed their DRHPs (through both the confidential and regular filing routes), representing a cumulative proposed issue size of over ₹3.2 lakh crore, and are expected to access the capital markets over the coming quarters.
As market sentiment improves, the substantial pipeline of SEBI-reviewed IPOs is well positioned to drive a sharp revival in primary market activity. Marquee offerings such as SBI Funds Management, Moneyview, NSE and Jio, alongside high-growth companies including Milky Mist, Zepto and Razorpay, could make H2 2026 one of the busiest periods for India’s capital markets in recent years.
Bottom line: The slowdown is about timing, not ambition – and a deep, high-quality pipeline leaves India poised for a robust second half.
IPO Insights
More Listings, Leaner Deals: 2026 IPO Landscape
Year 2025 vs Year 2026
Despite increase in the number of listings in the first half of 2026 against 2025, total funds raised declined by ~28%, from ~INR 29,834 crore to ~INR 21,506 crore. This was driven by a moderation in average issue size, which fell from ~INR 1,570 crore to ~INR 935 crore, reflecting a higher proportion of smaller offerings in H1 2026.
Primary issue and OFS:
OFS remained the dominant component across both periods, contributing ~54% of total proceeds in H1 2025 and rising further to ~56% in H1 2026. The primary issuance share correspondingly eased from ~46% to ~44%, indicating a continued tilt towards secondary sale of existing holdings over fresh capital raising by issuers.
More Listings, Leaner Deals: Q2 of Year 2026 IPO Landscape
April emerged as the strongest month of the quarter, with four listings raising INR 2,099 crore. In comparison, May and June witnessed one and three listings, raising
INR 926 crore and INR 1,652 crore, respectively.
Primary issue & OFS:
Across the quarter, funds raised were skewed towards primary issuances, which contributed ~66% of the total. April and May were almost entirely primary-led, while June saw a larger OFS component, with OFS accounting for ~60% of that month’s proceeds.
of both.
Q2 Year 2025 vs Year 2026
In Q2 2025, 9 listings raised ~INR 13,850 crore, significantly higher than Q2 2026, where 8 listings contributed only ~INR 4,677 crore. This sharp decline was driven by both fewer listings and smaller issue sizes, with the average issue size falling from ~INR 1,539 crore in Q2 2025 to ~INR 585 crore in Q2 2026.
Sectoral IPO Landscape Q2 2026
Financial Services
Financial Services emerged as the largest sector by funds raised during the period, contributing ~INR 1,809 crore, accounting for roughly 40% of the total across all sectors, and well ahead of every other segment.
Healthcare
Healthcare continued to witness new listings, with one IPO raising INR 409 crore during the quarter
Construction
The construction sector saw a modest contribution of ~INR 150 crore during the period, reflecting limited primary market activity in the segment.
Capital Goods
Capital goods followed as the second-largest contributor, raising ~INR 1,731 crore. The sector, which has consistently featured among the more active segments in prior periods, continued to see participation.
FMCG
FMCG raised 579 crore from 2 issues, indicating subdued issuance activity in the consumer staples space during the period
Closer Look: Use of Proceeds
Follow the Money: What IPO Proceeds Reveal About Corporate Priorities
The deployment of funds raised highlights a clear tilt towards capital investment and general corporate flexibility, with capex and GCP together accounting for the bulk of proceeds.
- Funding Working Capital (30%) constituted the largest share of the proposed utilization, reflecting issuers’ focus on strengthening liquidity, supporting business expansion, meeting lease obligations, investing in branding and marketing initiatives, and funding research and development, among other operational requirements.
- Capital Expenditure (26%) represented the second-largest allocation, underscoring the continued emphasis on expanding capacity, enhancing infrastructure, and supporting long-term growth initiatives.
- Repayment of Loans (20%) accounted for a significant portion of the proposed utilization (includes repayment of subsidiaries loans), indicating a balanced approach by issuers towards deleveraging while simultaneously investing in future growth.
- General Corporate Purposes (17%) continued to form a meaningful component of the proposed utilization, providing issuers with operational and strategic flexibility to address evolving business requirements and potential opportunities.
- Primary Issue Expenses (8%) represented the costs incurred by the company for undertaking the public issue, including fees payable to intermediaries and other expenses directly attributable to the offering.
Investor Demand & Listing Performance
IPO Momentum Slows After a Strong 2025 Run
H2 2025 witnessed strong traction in IPO subscriptions, with issues averaging ~38x oversubscription. However, early 2026 saw a sharp moderation in participation, with February to April witnessing subscriptions of only ~2x, leading to a corresponding decline in listing gains.
Subscription levels rebounded sharply in June 2026, with average subscription rising to ~61x. This spike, however, was driven by a low base of only three listings during the month out of which — CMR Green Technologies, was subscribed ~127 times, and Hexagon Nutrition, subscribed ~54 times.
Qualified Institutional Buyers (QIBs)
QIB subscription levels remained robust through the second half of 2025, consistently exceeding 40x for seven months from July 2025 to January 2026.
However, participation saw a sharp decline from February 2026 onwards, driven by heightened global uncertainty impacting investor sentiment. Interest rebounded in June 2026 (~97x), though this was largely a low-base effect from only three listings rather than a broad-based recovery.
Non-Institutional Investors (NIIs)
The NII segment largely moved in tandem with QIBs, mobilizing comparable levels of capital across most months, reflecting broad-based participation from institutional and high-net-worth investors.
While February 2026 saw one of the lowest levels of interest, participation recovered sharply by June 2026 (~111x), concentrated in two out of the three listings — CMR Green (~127x) and Hexagon Nutrition (~54x) — and therefore a low-base effect rather than a genuine revival.
Overall subscription
Overall subscription levels highlight a shift from strong, broad-based participation in 2025 to a more cautious environment in early 2026. However, the mid-year uptick mirrors the recovery trend witnessed in prior years, signaling renewed momentum that could translate into higher participation over the coming quarters.
IPO Listing Gains Moderate Sharply in 2026 Compared to 2025
- Q2 2026 witnessed a comparatively better listing environment than the preceding quarter.
- While 3 companies has listed below their issue price (based on closing price on listing day), other listings have given meaningful listing gains.
- Around 62.5% of companies listed at a premium, with a meaningful share (~25%) delivering gains in the 15–40% band, highlighting better listing gains during the quarter, despite lower subscriptions.
Lock-in of Shares in an IPO
The basics
Who is a promoter? Under the SEBI (ICDR) Regulations, a promoter includes a person who is:
- named as such in the offer document
- identified by the issuer in its annual return
- who controls the affairs of the issuer directly or indirectly, or on whose advice, directions or instructions the board is accustomed to act.
A person acting merely in a professional capacity is not a promoter; nor is an institutional investor such as a bank, mutual fund, AIF or insurer treated as one simply for holding 20% or more of the capital.
What is lock-in? Lock-in is a restriction under which specified securities cannot be transferred for a stipulated period measured from the date of allotment in the IPO. It prevents pre-IPO holders from exiting immediately after listing, keeping their interests aligned with the company and its new public shareholders.
How lock-in applies across three types of shareholders
On capital expenditure.
The extended promoter lock-in applies where the majority of the issue proceeds is proposed to be used for capital expenditure. Importantly, it also includes the repayment of existing loans that were taken to fund such capital expenditure – so using IPO proceeds to repay capex-linked debt triggers the same longer lock-in as spending on the capital assets directly.
Return of Open Market Buybacks
What has changed
From August 1, 2026, listed companies can once again buy back shares directly from the market through the stock exchanges. This reverses SEBI’s earlier plan – based on the Keki Mistry committee’s recommendations – to phase out the open market route entirely by April 2025 in favour of the tender offer route. The route now returns with tighter guardrails to keep execution disciplined and equitable.
Why it was phased out – and how the 2026 rules fix it
Inequitable treatment of shareholders: On the exchange, anonymous price-time order matching meant a single large seller could absorb the company’s buy order, leaving retail shareholders out of the buyback altogether. To counter this, promoter and promoter-group holdings are now frozen at the ISIN level for the entire duration of the open market buyback, so the buying pressure the company creates absorbs shares only from public and retail investors.
Tax arbitrage: Earlier, the company paid buyback tax while the selling shareholder paid none – turning the route into a tax-free substitute for dividends and a cash-extraction tool for promoters and large investors. The Finance Act 2026 removes this by taxing buyback proceeds directly in the shareholder’s hands as capital gains, uniformly across the tender offer, open market and ordinary trading routes, so the arbitrage no longer exists.
“Bait and switch” and price support: A leisurely six-month window let companies announce a large buyback to lift the price on retail enthusiasm, then buy only on dips and deploy just a fraction of the announced amount. The window has been cut to 66 working days, with a mandatory minimum utilisation of 40% of the earmarked funds – forcing companies to execute promptly and actually deploy the capital they commit.
By removing the tax advantage, compressing the timeline and sidelining promoters, SEBI has reshaped the open market buyback into a regulated, flexible tool for capital allocation.
