IPO Alert: Capillary Technologies plans ₹850-crore public listing

The global SaaS (software as a service) market grew 22% from ₹3 trillion in 2015 to ₹8 trillion in 2020, and it is expected to gain 30% and reach around ₹23 trillion in the next four years. Indian SaaS companies are expected to generate $30 billion in revenue by 2025, capturing an 8%-9% share of the global SaaS market.

Capillary Technologies India Limited recently filed a draft red herring prospectus with the SEBI for an ₹850-crore initial public offering.

As per the prospectus, the issue consists of a fresh issue of equity shares aggregating up to ₹200 crores and an offer for sale of shares worth ₹650 crores by Capillary Technologies International Pte Ltd. The company may also consider a further issue of equity shares, including a private placement aggregating up to ₹20 crores.

Capillary Technologies plans to use ₹41.9 crores of the net proceeds from the offering towards repayment of loans. It will use ₹72 crores for the development of new product offerings and enhancing internally generated software. The other priorities are strategic investments and acquisitions, and general corporate purposes.

AI-based SaaS

Capillary Technology is a technology-first company that offers artificial intelligence-based cloud-native SaaS products and solutions such as automated loyalty management and customer data platforms, which enable its large enterprise customers to develop loyalty for their consumers and channel partners.

The Bengaluru-based company served around 250 brands in more than 30 countries including India, the United Arab Emirates, Saudi Arabia, Singapore, Indonesia, Malaysia, Thailand, the United States, and China, as of October 31, 2021.

The company is diversified across various verticals and judications that include businesses engaged in apparel, footwear, supermarkets, conglomerates, manufacturing & electronics, pharmacy & wellness, fine-dining & Quick Service Restaurant, luxury & jewelry, entertainment, and travel & hospitality.

Key Numbers

Capillary Technology reported revenue from operations of ₹114.9 crores for fiscal 2021. Its net profit was ₹16.94 crores during that period.

Being a SaaS company, the business is influenced by sales cycles which are long and unpredictable. As a result, sales and revenue are difficult to predict and may vary substantially from period to period.