Capillary Technologies: SaaS provider Capillary Technologies revives IPO plan

Capillary Technologies, which provides customer engagement and loyalty software services to companies, is reviving plans for its initial public offering after having shelved its previous attempt in 2021, people aware of the matter said.The Bengaluru-based Software-as-a-service company has sought proposals from investment banks this week, and will be choosing underwriters for its proposed public issue through which it could raise as much as Rs 2,000 crore, one of the people said.

“The company is aiming to file its draft papers in 2025…the size of the IPO in this attempt is expected to be bigger than the last time,” another person said, adding that the company has grown significantly since then, while also strengthening its foothold in the US and European markets. “Capillary closed FY24 with around $75 million in revenue,” the person added.

Capillary Technologies, backed by the likes of Warbug Pincus, Peak XV Partners and The Evolvence Group, had first filed its draft prospectus with the Securities and Exchange Board of India in December 2021 but then deferred its plan.

“The plan (now) is to list the company’s Indian entity on the exchanges … the promoter of this entity is Capillary’s Singapore-based holding company, which owns an over 98% stake in the operational India unit,” one of the people said.

Capillary Technologies declined to comment.

The company in June 2023 closed a $45 million funding round comprising both equity and debt from a clutch of investors, including a consortium of Avataar Ventures and its limited partners, Pantheon, 57Stars and Unigestion. In early 2024, it extended this round to include secondary transactions that saw Warburg Pincus and American Express partly sell their stakes. The round closed at $140 million.Capillary Technologies was founded in 2008 by IIT-Kharagpur alumni Aneesh Reddy, Ajay Modani and Krishna Mehra. Modani and Mehra have since moved on from the business, leaving Reddy at the helm. In August 2023, the company elevated senior executives Sridhar Bollam and Ananth Choubey to the cofounder status.

The company manages the backend loyalty programmes of big companies and conglomerates including the Tata Group, Aditya Birla Group, Domino’s, Shell and IndiGo. Most of its revenue comes from its larger customers.

“Acquisitions and inorganic expansion have emerged as the company’s key growth strategy over the years,” one of the people cited earlier said. “It has made two key acquisitions in the US in 2021 and 2023…this helps it expand into different geographies and business segments while substituting the customer acquisition cost required for traditional organic growth.”