The biggest Indian IPO for 2026 so far is not a consumer technology platform, or an electric vehicle manufacturer or an infrastructure company, but it is an asset management company. $1.03 billion-valued Funds Management’s public issue received subscriptions of 100% within the first two days, and as of March 2026, its managed assets are worth Rs 12.5 trillion, with sovereign funds of Singapore, Abu Dhabi and Norway as its anchor investors. Apart from the magnitude of this listing, what stands out is that the investors are subscribing to the continuing financialization of the savings of Indian households. For a long time, the conversation regarding Indian capital markets began with one standard query: “Are foreign investors buying or selling?”
While this continues to be a relevant question, it is not enough anymore. Selective flow of foreign capital is back. Foreign investors purchased Rs 14,634 crore worth of Indian banking stocks during the last fortnight of June – highest such fortnightly inflows in 14 months. Inflows of foreign investors to Indian government securities have been more than $6.5 billion since the beginning of June, aided by tax reforms, stable currency, and hopes of larger global index inclusion. The more significant factor is that foreign capital is flowing into an Indian market which is more and more able to sustain itself on a stronger domestic foundation.
Systematic investment schemes raised a record amount of Rs 31,781 crore in June. Equity mutual funds have now made net purchases for 64 straight months. Persistence counts for more here than any figure for a single month, indicating that involvement in capital markets is slowly turning into something inherent to households, not just the consequence of a growing market. Such developments need to be viewed not just as a good sign for the future of India’s IPO market but also as a market assessment of the business models emerging amid the evolving savings habits of Indians.
However, the mutual funds are far from the only component of this transformation process.
India’s alternative investment fund industry has grown to such a point that it is impossible to consider it marginal anymore. By March 31, 2026, AIFs attracted commitments worth almost Rs 16.94 lakh crore, raised more than Rs 7.02 lakh crore and invested Rs 6.76 lakh crore. Commitments from Category II AIFs, which include most of India’s private equity, private credit and special situations funds, totalled Rs 12.74 lakh crore and investments exceeded Rs 4.12 lakh crore. The category has committed over Rs 4.18 lakh crore into unlisted securities, signaling the emergence of professionally managed capital pools to fund businesses outside the market. The numbers are indicative of a trend that is quite significant. India is no longer just raising more capital but is creating more ways in which capital could be routed to companies.
A business that had the option of either a bank loan or a public market transaction now has other options such as growth equity, structured credit, acquisition finance, special situations capital, venture debt and AIFs. Each one meets a need and is distinct in terms of its risk-return profile. As the saying goes, don’t put your eggs in one basket - increased choices are also good news for Indian companies. Private credit is one such case. In 2025, India had $12.4 billion of private-credit investments spread over 166 deals, up 35% from last year. Refinancing, acquisition financing, and capex were the major use cases for more than one-third of the capital invested in the second half of the year.
In fact, domestic private credit managers had a greater proportion of their capital invested in India than international fund managers in 2025. That implies that it is not only the foreign capital coming into India but also the development of local knowledge in the origination and structuring of credit products. Mutual funds are linking personal savings with the public markets. As foreign players are sourcing global capital, research and price discovery, AIFs are channelling patient capital into unlisted firms, infrastructure, real estate, startups and special situations. Private credit funds are solving problems that might lie between banks and bonds.
A larger capital pool will give Indian firms greater scope to make investments, acquisitions, restructuring and grow. It could also dilute the concentration of financing risk for any one particular part of the financial system. But the larger the pool gets, the greater the importance of discipline. Indian experience with distressed assets has already demonstrated that capital structure cannot offset poor fundamentals forever. Alternative capital is already emerging as a viable complement to traditional lending. By March 2026, Indian AIFs had deployed Rs 6.76 lakh crore, including Rs 4.13 lakh crore through Category II AIFs, which house much of the country’s private-equity, private-credit and special-situations capital. Private-credit deployment reached $12.4 billion across 166 transactions in 2025, growing 35% by value over the previous year. More than 35% of the capital deployed during the second half of 2025 supported refinancing, acquisitions and capital expenditure, demonstrating its ability to meet both balance-sheet and growth-related requirements.
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India has reasons to be encouraged by the development of its capital markets. Savings of households are being channelled into professional investment products. Foreign investors are discovering new opportunities in Indian stocks and bonds. AIFs are channelling institutional and savvy money into the unlisted sector. However, the decisive factor is going to be not how much capital India manages to attract or how efficiently it deploys its funds. This will depend on how well the money finds its way to businesses that can use it properly, how clearly investors understand the risks instead of shifting them and how well they are compensated for their risks. India is getting a deeper capital pool.
About the Author
Anand Mody is the Chief Operating Officer and Head of Products at Aikyam Capital Private Limited, bringing with him extensive experience in the financial services sector. Known for his sharp eye for detail and strong analytical understanding, Anand brings a robust background in risk management, trading and offshore structuring.
