Managing director of Peak XV Partners, previously Sequoia Capital India & Southeast Asia, Shailendra Singh, stated that India provides a “very favourable” climate for businesses to initiate initial public offerings.

“My general opinion is that the regulatory framework, the work done by the Reserve Bank of India, the Securities and Exchange Board of India, and other regulators is actually really good, especially in Indian public markets,” Singh told CNBC.

India has produced “a very favourable environment” for firms to list there, according to Singh, who has overseen the venture capital company since 2011 and has worked there for 18 years. “It’s safe and dynamic for a young company to go public in India.”

According to an EY analysis, there were 220 initial public offerings (IPOs) in India last year, up 48% from 2022. This makes India the second-largest IPO market globally. Despite maintaining its top position, Mainland China had a 29% decline in IPOs, to 302.

According to EY, the Indian IPO market is expected to continue to be strong in 2024 due to a solid economy, upbeat investor confidence, and prospects of reduced inflation and interest rate reductions.

“The Indian capital markets have evolved quite a bit. The markets have deepened in terms of liquidity. There’s lots of interest in tech companies coming up because … we are beginning to see a large number of companies with triple-digit million revenues and profits,” Singh said.

According to KPMG’s study “IPOs in India,” published last month, confidence over India’s strong economic fundamentals is the primary reason for the country’s emergence as a bright spot among global financial uncertainties.

Singh explained, “Founders are realising that the U.S. markets may not always understand Indian companies,” as to why some Indian businesses would rather list domestically.

Peak XV reported that up to 20 of its portfolio firms, including Zomato and Mamaearth, had gone public through initial public offerings. One of the biggest IT investors in Asia, Peak XV Partners, oversees $9 billion in assets.

Three separate entities, Sequoia Capital in the United States and Europe, Peak XV Partners in India and Southeast Asia, and HongShan in China, constituted Sequoia’s global partnership division in June.

The venture capital firm has made investments in over 400 businesses in the technology, software, financial services, and consumer sectors. Notable clients include the Indonesian coffee chain Kopi Kenangan, the fintech company Pine Labs in India, the online marketplace Carousell based in Singapore, and the edtech companies Byju’s and Unacademy.

According to Singh, there are some “pretty exciting” investment opportunities in India. The company’s top three investment industries include fintech, consumer goods, and cross-border software.

Peak XV is placing a lot of money on cross-border software because of the possibility of software firms being established in India that serve the entire globe, he stated.

“Our second-[biggest] sector tends to be fintech. We are a very strong fintech investor. I think India is one of the world’s most fertile markets because of Aadhaar, UPI and the India stack.”

He mentioned consumer brands, ed-tech, and healthcare as the company’s investment priorities in the consumer-centric industry.

Long-term, Singh said, “we will see plenty of good education companies being built,” as customers in China and India realise that education is the key to social mobility.

Although they are still in their infancy, he added, there are other developing fields like deep tech and semiconductors that are fascinating. “We have just begun placing bets.”

(Adapted from CNBC.com)

Categories: Economy & Finance, Entrepreneurship, Regulations & Legal, Strategy