Fractal Analytics readies IPO plans, targets $2.5 billion valuation

JP Morgan, Morgan Stanley and Kotak Mahindra Capital were hired to run the fundraising process.

Currently, PE fund Apax Partners and TPG Capital together own about 60% of the company where TPG is the largest shareholder with 35% stake. In December, TPG invested $360 million in Fractal at a valuation of $1 billion. Spokespersons with TPG and Fractal Analytics declined comment, while a mail sent to Apax Partners did not elicit any response till the press time.

Agencies

The Bengaluru- and New York-based AI startup, which counts Google, Reckitt Benckiser and Wells Fargo among its customers, employs more than 3,500 across 16 global locations, including the US, UK, Ukraine, India, Singapore and Australia. Fractal is expected to post a revenue of $150 million in the fiscal year ending March 2022. Founded in 2000 by Srikanth Velamakanni, Pranay Agrawal, Nirmal Palaparthi, Pradeep Suryanarayan and Ramakrishna Reddy, Fractal Analytics initially operated with a software-as-a-service (SaaS) delivery model. In 2014, it expanded its presence with a new office in Bengaluru.

Fractal got its first external funding in 2008 from early-stage investor Kae Capital. In 2013 raised $25 million from US-based PE firm TA Associates. Montreal analytics firm Aimia acquired a minority stake in Fractal in the following year. In 2016, Khazanah Nasional Berhad, the strategic investment fund of the Government of Malaysia, invested $100 million in Fractal. In 2019, Apax acquired a significant minority stake through a primary and secondary share purchase from TA Associates and Khazanah. Mu Sigma, one of the major competitors of Fractal Analytics, is also backed by investors such as General Atlantic, Sequoia Capital, Fidelity Investments and MasterCard Inc. Last year, data analytics company LatentView Analytics went public, becoming one of the first such deep tech Indian startups raising public money. A ₹600-crore initial public offering (IPO) of Latent View received record bids worth ₹113,000 crore, the best in the history of the Indian primary market.

Barring capital markets, Data analytics and AI companies are attracting huge investments from entrepreneurs, venture capitalists and private equity firms thanks to faster pace of digital transformation especially due to the pandemic.

The Covid-19 pandemic has accelerated the pace of artificial intelligence (AI) adoption, but many say it’s moving too fast, as per a new KPMG study. Despite concerns about the speed of adoption, business leaders are confident AI can help solve some of the toughest challenges of the times, including tracking Covid-19 and vaccines, said the KPMG study – Thriving in an AI World. About 11 technology-driven startups raised over $7.36 billion in 2021 from the public markets through IPOs, setting the base for Indian unicorns to tap capital markets. As much as $16.6 billion was raised in 2021 through initial public offering proceedings across 120 deals, compared to $3.64 billion across 44 deals in 2020, data compiled by Refinitiv showed.