Warburg Pincus, Sequoia Capital and Avataar Ventures backed Capillary Technologies files Rs 850 crore IPO papers

 Warburg Pincus, Sequoia Capital and Avataar Ventures backed Capillary Technologies files Rs 850 crore IPO papers

Capillary Technologies (India) Limited, a company that offers artificial intelligence (“AI”)-based cloud-native Software-as-aSolution (“SaaS”) products and solutions to develop loyalty of their consumers and channel partners filed its draft red herring prospectus (DRHP) for its Rs 850 crore initial public offering (IPO).

The initial public offering (IPO) with a face value of Rs 2 per equity share consists of a fresh issue of equity shares aggregating to Rs 200 crore, and an offer for sale of Rs 650 crore by Capillary Technologies International Pte Ltd (The Selling Shareholders”), according to the draft red herring prospectus (DRHP).

Backed by Warburg Pincus, Sequoia Capital, Avataar Capital, Qualcomm Asia Pacific and Filter Capital. The private equity firms stay invested in the company and are not diluting their stake in this IPO.

Additionally, the company, in consultation with the lead bankers to the issue may consider a further issue of equity shares including a private placement aggregating up to Rs 20 crore. If such placement is completed, the fresh issue size will be reduced.

The proceeds from its fresh issuance worth Rs 42 crore will be utilised for the repayment or prepayment of borrowings, in full or part of all or certain borrowings for the company; Rs 72 crore for investment in product development, investments in technology and other growth initiatives; Rs 30 crore for strategic investments and acquisitions and general corporate purposes.

The Bengaluru-based company are the market leader in Asia-Pacific region with a 39% market share in terms of loyalty management capabilities for the year 2020, based on the geographies in which it operates.

Founded in 2012 by Aneesh Reddy Boddu and Krishna Mehra, having a diversified product suite and technology platform allowing its customers to run end-to-end loyalty programs, to get a comprehensive view of consumers and offer unified, cross-channel strategies that deliver a real-time omnichannel, personalized, and consistent experience for consumers. According to Zinnov Report, it is the only company from Asia to be featured in the Forrester NowTech Loyalty Report and have been recognized as a leading vendor of hybrid loyalty solutions. 

The company served more than 250 brands across more than 30 countries across India, United Arab Emirates, Saudi Arabia, Singapore, Indonesia, Malaysia, Thailand, United States, and China as of October 31, 2021. Its customers and brands are diversified across verticals and jurisdictions that include businesses engaged in apparel, footwear, supermarkets, conglomerates, manufacturing and electronics, pharmacy and wellness, fine dining and QSR, luxury and jewelry, entertainment, travel and hospitality.

In Fiscal 2016 and Fiscal 2017, the promoter acquired Reasoning Global Eapplications Private Limited for their product, Martjack (rebranded as Anywhere Commerce+) and Sellerworx, respectively, which formed the base of Anywhere Commerce+ platform business. In September, it acquired Minneapolis-based customer experience company Persuade in its first US acquisition and fourth globally. Its potential competitors include mid-market independent software vendors such as TADA, COMO, and technology giants such as Oracle and SAP.

For fiscal 2021 and in the three months’ period ended June 30, 2021, it completed 8.07 million and 2.07 million transactions from its customers across India, Middle East and South East Asia with brands includes ASICS, Indian Terrain Fashions Limited, Apollo Medsmart, TTK Prestige, BIBA and Fossil.

The Asia Pacific loyalty management market is estimated to be Rs 229 billion or US$ 3 billion in 2021 and is expected to reach Rs 400 billion or US$ 5 billion by 2024, projecting a significant growth of 20%. Focusing on its go-to-market strategy in Asia, and with an intention to tap the untapped potential in the enterprise market in Asia to its existing large enterprises such as Tata, Jotun, Shell, Petron, Aditya Birla Fashion Limited and Al-Futtaim, to expand its New ARR and business.

The company’s revenue from operations stood at Rs 114.9 crore for the fiscal 2021, while its net profit was Rs 16.94 crore for the same period. For the quarter ending June 2021, revenue from operations was Rs 33.16 crore and net profit was Rs 2.53 crore.

ICICI Securities Limited, Kotak Mahindra Capital Company Limited, and Nomura Financial Advisory and Securities (India) Private Limited are the book running lead managers to the issue.