Fractal Analytics Bags $170 Mn Via Secondary Sale

SUMMARY

The deal involved the sale of a 6% stake held by Apax Partners to a consortium of 22 institutional investors, a source told Inc42

The top three buyers include Trust Investment Advisors, Gaja Capital and Neo Asset Management

Another source told Inc42 that Fractal is expected to file its DRHP by the end of this month or early next month and the IPO could value the company at $3 Bn

In the run up to its IPO, Fractal Analytics has raised $170 Mn through a secondary share sale, valuing the SaaS unicorn at $2.44 Bn.

The deal involved the sale of a 6% stake held by Fractal’s early backer Apax Partners to a consortium of 22 institutional investors, a source close to the development told Inc42.

The top three buyers include Trust Investment Advisors, Gaja Capital and Neo Asset Management, while others such as White Oak Capital Management also participated in the round.

The startup was last valued $1.55 Bn after raising capital from TPG Capital in 2023.

Another source told Inc42 that Fractal is expected to file its DRHP by the end of this month or early next month. The IPO size is likely to be in the range of $400–500 Mn and could value the company at $3 Bn.

Queries sent to Fractal on the development did not elicit any response till the time of filing this story.

The development was first reported by NDTV Profit, which cited the size of the round at $150 Mn. The Economic Times also covered the story, reporting the round size as $170 Mn.

The development comes alongside Inc42’s exclusive report that Fractal’s cofounder and CEO, Srikanth Velamakanni, infused INR 48.7 Cr (about $5.6 Mn) into the company.

While the company is actively making capital transactions, it is also undertaking several R&D initiatives and product launches to ramp up revenue.

To name a few this year, it submitted a proposal worth INR 150 Cr to the IndiaAI Mission to build a multimodal medical foundational model, and is also planning to develop India’s first large reasoning model (LRM) with a total investment of INR 118 Cr.

With most new-age technology companies ensuring profitability before going public, Fractal, in contrast, slipped into the red in FY24. It posted a net loss of INR 54.7 Cr during the year against a profit of INR 194.4 Cr in FY23, while maintaining a revenue growth of 11% YoY to INR 2,196.3 Cr in FY24.

Notably, this would be the second attempt by the SaaS major to go public after its initial plans in 2021 were shelved due to weak market conditions. This time, the company has already roped in Morgan Stanley, Kotak Mahindra Capital, and Axis Capital as bankers for the public issue.

Founded in 2000 by Srikanth Velamakanni and Pranay Agrawal, Fractal offers AI and advanced analytics solutions to enterprises globally. It counts the likes of Google and Wells Fargo among its clients. The company generates revenue through analytics and consulting services, as well as license and subscription fees for its proprietary AI products and platforms.

Fractal’s product suite includes the enterprise agentic AI platform Cogentiq, GenAI-powered recruiting platform Iqigai, text-to-image generator Kalaido.ai, AI-powered executive coach Marshallgoldsmith.ai, AI health assistant Vaidya.ai, GenAI tool for sales Flyfish.ai, AI platform for revenue growth Asper.ai, and AI solution for medical imaging Qure.ai.

It has raised over $685 Mn in total funding to date and counts TA Associates, TPG, and Malaysia’s Khazanah Nasional Berhad (KNB) among its backers. Reports suggest that some of these investors, including TPG and KNB, may pare their stake via OFS in the IPO.