Shailendra Singh, Managing Director, Peak XV Partners.
Lionel Ng | Bloomberg | Getty Images
India provides a “very favorable” environment for companies to launch initial public offerings, said Shailendra Singh, managing director at Peak XV Partners, formerly known as Sequoia Capital India & Southeast Asia.
“My general view, especially in the Indian public markets, is the regulatory framework, what the Securities and Exchange Board of India is doing, what the Reserve Bank of India is doing, what other regulators are doing is actually really good,” Singh told CNBC's Tanveer Gill.
Singh, who has worked at the venture capital firm for 18 years and led it since 2011, said India has created a “very conducive environment” for companies to list their stocks there. “It is safe and dynamic in India 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 an EY report. Although mainland China ranked first, the number of IPOs there fell by 29% to 302.
The Indian IPO market is set to remain strong in 2024, supported by upbeat investor sentiment, a strong economy and expectations of lower inflation and lower interest rates, EY said.
“Indian capital markets have evolved quite a bit. The markets have deepened in terms of liquidity. There is a lot of interest in upcoming technology companies because…we are starting to see a large number of companies with multi-million dollar revenues and profits,” Singh said.
India is emerging as a bright spot amid global macroeconomic uncertainty, mainly driven by optimism about the country's resilient economic fundamentals, KPMG said last month in its report titled 'India IPOs'.
Regarding why some Indian companies prefer to list locally, Singh said: “The founders realize that American markets may not always understand Indian companies.”
As many as 20 companies, including Zomato and Mamaearth in Peak XV's portfolio, have listed via IPOs, the company 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: Sequoia Capital in the United States and Europe, PeakXV Partners in India and Southeast Asia, and Hongshan in China.
The venture capital firm has invested in more than 400 companies across the technology, software, financial services and consumer sectors, including Indian fintech company Pine Labs, Indonesian coffee chain Kopi Kenangan, Singapore-based online marketplace Carousell, and edtech companies Byju's and Unacademy.
Favorite sectors in India
India has several “very exciting” investment areas, Singh said, describing cross-border software, fintech and consumer as the company's biggest sectors for investments.
He said cross-border software is a key area that Peak XV is betting on, given the potential of Indian software companies to build for the world.
“Our second (largest) sector is fintech-leaning. We are a very strong investor in fintech. I think India is one of the most fertile markets in the world because of Aadhaar, UPI and the India stack.”
In the consumer-focused sector, he listed consumer, educational technology and healthcare brands as the company's focus for investments.
“We're going to see a lot of good education companies being built over the long term,” Singh said, as consumers in places like India and China realize that the path to upward social mobility is through education.
There are also emerging areas such as deep technology and semiconductors, which are interesting even though they are still in the early days, he said. “We're (just) starting to place bets.”
