The Indian IPO market has been described as offering a “very favorable” environment for companies looking to go public. According to Shailendra Singh, managing director at Peak XV Partners, formerly Sequoia Capital India & Southeast Asia, the regulatory framework in India, especially with bodies like the Securities and Exchange Board of India and the Reserve Bank of India, is extremely robust and conducive to public listings. Singh also pointed out that the Indian market saw a significant increase in the number of IPOs in 2023, with 220 IPOs taking place, marking a 48% growth from the previous year.
Market Performance and Growth Expectations
India has emerged as the second-largest IPO market in the world, with Mainland China taking the top spot. However, the number of IPOs in China has seen a decline of 29%, while India continues to remain strong. The positive investor sentiment, coupled with a robust economy and expectations of lower inflation and rate cuts, are expected to keep the Indian IPO market buoyant in the coming years. This growth has been attributed to the evolution of the Indian capital markets and the deepening of market liquidity.
Preference for Listing Locally
There is a growing trend among Indian firms to list locally rather than venturing into foreign markets like the U.S. According to Singh, founders are realizing that the U.S. markets may not always fully understand Indian companies. This trend has led to companies like Zomato and Mamaearth, among others in Peak XV’s portfolio, opting for IPOs in India. Peak XV Partners, managing $9 billion in assets, has invested in over 400 companies across various sectors, including technology, software, finance, and consumer goods.
Singh outlined the key investment areas and sectors of focus for Peak XV Partners in India. The firm is particularly interested in cross-border software, fintech, and consumer-centric sectors. Cross-border software development, especially with companies in India catering to a global audience, remains a crucial area of investment. Fintech, driven by initiatives like Aadhaar and UPI, presents significant opportunities in the Indian market. Additionally, consumer brands, ed-tech, and healthcare are identified as potential growth areas for investments.
Aside from the primary sectors of focus, Singh highlighted emerging areas such as deep tech and semiconductors as interesting prospects for investment, albeit in the early stages. The future of the Indian IPO market appears promising, with evolving market trends and a conducive regulatory environment contributing to the growth and development of companies going public in India. Overall, the Indian IPO market continues to show resilience and potential for further expansion, attracting both domestic and international investors looking to capitalize on the country’s economic fundamentals.
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