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Peak XV: India 'Very Favorable' for IPOs

Shailendra Singh, said, India provides an exceptionally favorable environment for companies to launch IPOs
May 16, 2024

India's IPO market is on fire, and according to Shailendra Singh, Managing Director at Peak XV Partners (formerly Sequoia Capital India & Southeast Asia), it offers an incredibly favorable environment for companies looking to go public.

Singh, who has been with the VC firm for 18 years and led it since 2011, expressed his confidence in the Indian public markets, citing the country's robust regulatory framework as a key factor. "It’s both safe and dynamic in India for a young company to be able to go public," he told.

Last year, India saw 220 IPOs, a 48% increase from 2022, making it the world's second-largest IPO market, according to an EY report. This trend is set to continue in 2024, driven by optimistic investor sentiment, a strong economy, and expectations of lower inflation and rate cuts.

Singh emphasized that the Indian capital markets have matured significantly, with increased liquidity and growing interest in tech companies. "We are beginning to see a large number of companies with triple-digit million revenues and profits," he added.

India's emergence as a bright spot amid global macroeconomic uncertainty is evident, with investors optimistic about the country's resilient economic fundamentals, as noted in KPMG's report “IPOs in India.”

When asked about why some Indian firms prefer to list locally rather than in the U.S., Singh explained: "Founders are realizing that the U.S. markets may not always understand Indian companies."

Peak XV Partners, one of Asia’s largest tech investors, has seen 20 companies from its portfolio, including Zomato and Mamaearth, list via IPOs. Managing $9 billion in assets, the firm focuses on various sectors, with cross-border software, fintech, and consumer industries being the most prominent.

Cross-border software is a key area of investment for Peak XV, given India's potential to build software companies for the global market. "Our second-biggest sector tends to be fintech. I think India is one of the world’s most fertile markets because of Aadhaar, UPI, and the India stack," Singh stated.

In the consumer-centric sector, the firm focuses on consumer brands, ed-tech, and healthcare. Singh believes that education companies will continue to thrive in the long term, given the emphasis on education for upward social mobility in countries like India and China.

Additionally, emerging areas such as deep tech and semiconductors are gaining interest, although it's still early days. "We are starting to make bets," Singh concluded.

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