Shailendra Singh, Managing Director, Peak XV Partners.
Lionel Ng | Bloomberg | Getty Images
India offers a “very favorable” environment for companies to launch initial public offerings, said Shailendra Singh, managing director at Peak XV Partners, formerly Sequoia Capital India & Southeast Asia.
“My general view is, especially in the Indian public markets, the regulatory framework, what the Securities and Exchange Board of India is doing, what the Reserve Bank of India is doing, what the other regulators are doing is actually really good,” Singh told CNBC.
Singh, who has been with the venture capital firm for 18 years and has led it since 2011, said India has created a “very conducive environment” for companies to list there. “In India, it is both safe and dynamic for a young company to be able to go public.
There were 220 IPOs in India last year, up 48% from 2022, making it the second largest IPO market in the world, according to EY report. Although mainland China took the top spot, the number of IPOs there fell 29% to 302.
The Indian IPO market is will remain strong in 2024supported by optimistic investor sentiment, a stable economy and expectations of lower inflation and interest rate cuts, EY said.
“Indian capital markets have developed quite a bit. Markets deepened in terms of liquidity. There’s a lot of interest in technology companies because … we’re starting to see a large number of companies with triple-digit million revenue and earnings,” Singh said.
India has emerged as a bright spot amid global macroeconomic uncertainty, driven mainly by optimism about the country’s sustainable economic fundamentals, KPMG said last month in his report “IPOs in India.”
On why some Indian firms prefer to list locally, Singh said: “The founders realize that the US markets may not always understand Indian companies.”
About 20 companies, including Zomato and Mamaearth in Peak XV’s portfolio, have listed through the IPO, the firm said. Peak XV Partners, one of Asia’s largest technology investors, manages $9 billion in assets.
In June, Sequoia split its global partnership into three independent units, namely Sequoia Capital in the US and Europe, Peak XV Partners in India and Southeast Asia, and HongShan in China.
The venture capital firm has invested in more than 400 companies in the technology, software, financial services and consumer sectors, including Indian fintech firm Pine Labs, Indonesian coffee shop chain Kopi Kenangan, Singapore-based online marketplace Carousell and edtech companies Byju’s and Unacademy.
Favorite sectors in India
India has a number of “pretty exciting” investment areas, Singh said, citing cross-border software, fintech and consumer as the firm’s biggest sectors for investments.
Cross-border software is a key area that Peak XV is betting on, given the potential of software companies built in India for the entire world, he said.
“Our second-[biggest] the sector is fintech. We are a very strong fintech investor. I think India is one of the most fertile markets in the world because of Aadhaar, UPI and the India stack.”
In the consumer-facing sector, he pointed to consumer brands, electronics technology and healthcare as the firm’s focus for investments.
“We’re going to see a lot of good education companies being built over the long term,” Singh said, noting that consumers in places like India and China understand that the path to upward social mobility is through education.
There are also emerging areas such as deep technology and semiconductors that are interesting, although it is still early days, he said. “We are [just] starts making bets.”
https://www.cnbc.com/2024/05/16/india-offers-a-very-favorable-environment-for-firms-to-ipo-peak-xv-says-.html
