Fractal Analytics revives IPO plans; eyeing $500 mn plus raise at $3bn- $3.5bn valuation

A second person told Moneycontrol that investment banks Kotak Mahindra Bank and Morgan Stanley have been appointed as the advisors and more could be added at a later stage. (representative image)

Fractal Analytics, a US-based leading global provider of artificial intelligence and advanced analytics solutions, founded by a quintet of IIM Ahmedabad graduates, has revived plans for a domestic initial public offer (IPO) and kicked off the deal, multiple industry sources in the know told Moneycontrol.

"The firm had evaluated an IPO two years back but those plans fell through. This time, the deal is on and was kicked of earlier this week. Fractal Analytics is looking to raise $500 million plus via the initial public offer and is targeting a valuation of $3bn to $3.5 billion," said one of the persons above.

A second person told Moneycontrol that investment banks Kotak Mahindra Bank and Morgan Stanley have been appointed as the advisors and more could be added at a later stage.

"The IPO will be a combination of primary and secondary issue of shares and will provide a partial exit window to investors Apax Partners and TPG," this person added.

A third person familiar with the firm's listing plans said that Fractal Analytics was seen as one of the biggest beneficiaries of the Generative AI opportunity.

All the three persons above spoke to Moneycontrol on the condition of anonymity.

Email queries sent to Fractal Analytics and its management were left unanswered at the time of publishing this article. TPG declined to comment.

An immediate response could not be elicited from Apax Partners, Kotak Mahindra Capital and Morgan Stanley.

In November 2021, digital analytics firm Latent View Analytics made a stunning debut on the domestic bourses, registering a 169 percent pop over its issue price of Rs 197/share. The stock closed at Rs 452.80/share at the end of day’s trade on March 14.

The Fractal story

Fractal Analytics was founded in 2000 by Srikanth Velamakanni, Pranay Agrawal (currently CEO) Nirmal Palaparthi, Pradeep Suryanarayan and Ramkrishna Reddy. It reported FY23 revenues and profits of Rs 1,985 crore and Rs 194 crore, respectively.

On January 5, 2022, Fractal Analytics hit unicorn status when TPG invested $360 million in a transaction that included a combination of primary investment and secondary share purchase from funds advised by Apax Partners. In January 2019, Apax Partners had bet $200 million in Fractal and acquired a significant stake by giving an exit to Khazanah and TA Associates.

According to the firm's website, both TPG Capital and Apax Partners have two board positions. Gulu Mirchandani, one of the firm's early investors, Gulu Mirchandani, Founder Chairman of the Onida Group is also on the firm's board.

Fractal is a key provider of artificial intelligence to several Fortune 100 & 500 companies like Google, Wells Fargo and Reckitt Benckiser and its businesses include Crux Intelligence (AI driven business intelligence), Eugenie.ai (AI for sustainability), Asper.ai (AI for revenue growth management), Senseforth.ai (conversational AI for customer service) and Flyfish (generative AI for Sales).

Fractal also incubated Qure.ai, a leading player in healthcare AI for detecting Tuberculosis and Lung cancer. The firm has 4,000+ employees across 16 global locations, including the United States, UK, Ukraine, India, Singapore, and Australia.

In the interview to Moneycontrol on the sidelines of the Nasscom Technology and Leadership Forum (NTLF) in March 2023, Fractal's Co-founder, Group Chief Executive and Executive Vice -Chairman Srikanth Velamakanni said: “Eventually, our goal is to serve 500 of the largest companies on the planet and work with them. If they spend about $30 million with us annually, we can become a $15 billion company. We are not chasing valuation, but I think we have a path to becoming a $15 billion revenue company.”