In keeping with Peak XV, India offers a “very favorable” environment for firms to go public

India offers a “very favorable” environment for firms to launch IPOs, said Shailendra Singh, managing director at Peak XV Partners, formerly Sequoia Capital India & Southeast Asia.

“My general opinion is that the regulatory framework, particularly in the public markets of India, 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 said told CNBC's Tanvir Gill.

Singh, who has been with the VC firm for 18 years and has headed it since 2011, said India has created “a very conducive environment” for firms to go public. “In India, it is both safe and dynamic for a young company to go public.”

There were 220 IPOs in India last yr, 48% greater than in 2022, making India the world's second-largest IPO market, in line with a study EY report. Although mainland China took the highest spot, the variety of IPOs there fell 29% to 302.

The Indian IPO market is will remain strong in 2024buoyed by optimistic investor sentiment, a strong economy and expectations of lower inflation and rate of interest cuts, EY said.

“The Indian capital markets have evolved significantly. Markets have 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 revenues,” Singh said.

India is emerging as a bright spot amid global macroeconomic uncertainty, driven largely by optimism about the country's robust economic fundamentals. KPMG said last month in its report “IPOs in India”.

On why some Indian firms prefer to list locally, Singh said, “Founders realize that US markets may not all the time understand Indian firms.”

As many as 20 companies, including Zomato and Mamaearth in Peak XV's portfolio, have listed through IPOs, the company said. Peak XV Partners, one of Asia's largest technology investors, has $9 billion in assets under management.

In June, Sequoia split its global partnership into three independent entities, 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 technology, software, financial services and consumer companies, including Indian fintech firm Pine Labs, Indonesian coffee chain Kopi Kenangan, Singapore-based online marketplace Carousell and edtech companies Byju's and Unacademy.

India has several “pretty exciting” investment areas, Singh said, citing cross-border software, fintech and consumer as the company's biggest investment sectors.

Cross-border software is a key area that Peak XV is betting on, given the potential for India to build software companies for the world, he said.

“Our second-“[biggest] The sector tends to be 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 cited consumer brands, education technology and healthcare as the company's investment priorities.

“In the long term, we will build a lot of good education companies,” Singh said, as consumers in countries like India and China understand that the path to upward social mobility is through education.

There are also emerging areas such as deep tech and semiconductors that are interesting, even if they are still in their infancy, he said. “We are [just] I start making bets.