Capillary Technologies India has filed its draft prospectus with capital market regulator SEBI. The company offers artificial intelligence (AI)-based cloud-native Software-as-a Solution (SaaS) products and solutions to its enterprise clients to develop loyalty of their consumers and channel partners. Capillary Technologies IPO is looking to mobilize as much as INR850 crore through a mix of fresh issue and an OFS.
Capillary Technologies IPO: INR850 crore through Fresh shares, OFS
The upcoming IPO will involve a fresh issue of equity shares aggregating to INR200 crore, and an offer for sale of INR650 crore by Capillary Technologies International Pte Ltd. The company counts Warburg Pincus, Sequoia Capital, Avataar Capital, Qualcomm Asia Pacific and Filter Capital among its shareholders but none of these private equity firms is diluting their stake in this IPO.
The company may consider a further issue of equity shares including a private placement aggregating up to INR20 crore. If such placement is completed, the fresh issue size will be reduced.
Capillary Technologies IPO: Use of IPO proceeds
Capillary Technologies IPO proceeds are expected to be used towards the following objectives
- Repayment or prepayment of borrowings – INR42 crore
- Investment in product development, investments in technology and other growth initiatives – INR72 crore
- Strategic investments and acquisitions – INR30 crore
- General corporate purposes
Capillary Technologies: The business of loyalty
The Bengaluru-based company’s diversified product suite and technology platform allows its customers to run end-to-end loyalty programs, get a comprehensive view of consumers and offer unified, cross-channel strategies that deliver a real-time omnichannel, personalized, and consistent experience for consumers.
Started by Aneesh Reddy Boddu and Krishna Mehra in 2012, the company is the market leader in Asia-Pacific region with a 39% market share in terms of loyalty management capabilities for the year 2020. 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 31 October 2021. The customers included 12 Fortune 500 companies. 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.
Acquisition-led growth
In FY2016 and FY2017, the company promoter Capillary Technologies International Pte Ltd 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 2021, 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 FY2021 and in the three months’ period ended 30 June 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 INR229 billion or USD 3 billion in 2021 and is expected to reach INR400 billion or USD 5 billion by 2024, projecting a significant growth of 20%. The company is focusing on its go-to-market strategy in Asia, and plans to expand its new ARR and business by onboarding new customers.
Financial performance
The company’s revenue from operations stood at INR114.9 crore for FY2021, while its net profit during the same period was INR16.9 crore. For the quarter ending June 2021, revenue from operations was INR 33.2 crore and net profit was INR 2.5 crore.
