Fractal Analytics Files for ₹4,900 Crore IPO
A Leap into the Public Market
Fractal Analytics, a prominent player in artificial intelligence and analytics, has officially submitted its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for an Initial Public Offering (IPO) valued at ₹4,900 crore. This landmark move could elevate India’s first AI unicorn to a valuation exceeding $3.5 billion, according to a report from Bloomberg.
IPO Composition
The IPO consists of two primary components: a fresh issue of equity shares totaling up to ₹1,279 crore and an offer for sale (OFS) of equity shares worth ₹3,620 crore. This dual approach aims to attract various types of investors while raising substantial capital for the company.
Breakdown of the Offer for Sale
The Offer for Sale of equity shares of face value Re 1 each includes:
- ₹1,462 crore from Quinag Bidco Ltd
- ₹1,999 crore from TPG Fett Holdings Pte. Ltd
- ₹29.5 crore from Satya Kumari Remala and Rao Venkateswara Remala
- ₹129 crore from GLM Family Trust
Book Building Process
The company will utilize a book building process, adhering to Regulation 6(2). The distribution of the Net Offer will be as follows:
- 75% to Qualified Institutional Buyers (QIBs)
- 15% to Non-Institutional Investors
- 10% to Retail Individual Investors
Additionally, a reservation for eligible employees will allocate up to 5% of the company’s post-offer paid-up equity shares.
Leading the IPO
The Book Running Lead Managers (BRLMs) facilitating this IPO are:
- Kotak Mahindra Capital Company Limited
- Morgan Stanley India Company Private Limited
- Axis Capital Limited
- Goldman Sachs (India) Securities Private Limited
Pre-IPO Placement Opportunity
In conjunction with the IPO, Fractal Analytics is considering a pre-IPO placement of up to ₹255.8 crore. Should this be executed, it will be based on a pricing structure determined in consultation with the BRLMs prior to the DRHP filing with the Registrar of Companies (RoC).
Utilization of Proceeds
Fractal Analytics plans to channel the net proceeds from the IPO towards several strategic initiatives, including:
- Investment in its subsidiary, Fractal USA
- Pre-payment and/or scheduled repayment of borrowings
- Purchase of new laptops
- Establishing new office premises in India
- Investment in research and development
- Sales and marketing under Fractal Alpha
- Funding inorganic growth through potential acquisitions
- General corporate purposes
Company Background
Founded in 2000 by Srikanth Velamakanni and Pranay Agrawal, Fractal Analytics has evolved into a leader in AI solutions, serving large global enterprises across various sectors. Their key offerings include data-driven insights that facilitate better decision-making processes.
Backing and Expertise
Supported by renowned investors such as TPG, Apax, and Gaja, Fractal Analytics stands as a pioneering force in India’s pure-play data and artificial intelligence sector. Its expertise spans multiple industries, including:
- Consumer packaged goods & retail
- Technology, media, and telecommunications
- Healthcare and life sciences
- Banking, financial services, and insurance
Competitive Positioning
According to industry reports, Fractal is uniquely positioned to lead the market, actively investing in expanding its AI software portfolio and bolstering research and development efforts. By March 31, 2025, they have served an impressive roster of clients, including industry giants like Microsoft, Apple, Nvidia, Alphabet, Amazon, Meta, and Tesla.
Financial Performance
Fractal’s financial metrics indicate significant growth, with revenues increasing by 25.9% to ₹2,765 crore in FY25, compared to ₹2,196 crore in FY24. The company also achieved a notable turnaround in profit after tax (PAT), rising to ₹220 crore from a loss of ₹54.7 crore in the previous fiscal year. Both PAT and EBITDA margins have improved, with PAT standing at 12.6% and EBITDA at 17.4%.
Closing Thoughts
As Fractal Analytics embarks on this significant IPO journey, it sets its sights on future expansions and enhanced market presence. Their commitment to advancing AI solutions uniquely positions them to remain a formidable competitor in today’s rapidly evolving technological landscape.
Frequently Asked Questions
1. What is the total size of the IPO Fractal Analytics is filing?
Fractal Analytics is filing for an IPO worth ₹4,900 crore, which includes a fresh issue and an offer for sale of shares.
2. Who are the Book Running Lead Managers for this IPO?
The BRLMs for the IPO are Kotak Mahindra Capital Company, Morgan Stanley India Company, Axis Capital, and Goldman Sachs (India) Securities.
3. How will the shares be distributed among investors?
The distribution will allocate 75% to Qualified Institutional Buyers, 15% to Non-Institutional Investors, and 10% to Retail Individual Investors, with an additional 5% reserved for eligible employees.
4. What are Fractal Analytics’s plans for the funds raised from the IPO?
The funds will be utilized for investment in its subsidiary, repayment of borrowings, purchase of laptops, setting up new offices, R&D, sales and marketing, acquisitions, and general corporate purposes.
5. What notable clients does Fractal Analytics serve?
Fractal Analytics serves leading clients such as Microsoft, Apple, Nvidia, Alphabet, Amazon, Meta, and Tesla, providing them with AI-driven insights and solutions.
