Can you tell me about the details of the proposed IPO of Capillary Technologies?
Answer
Answer
Capillary Technologies, an artificial intelligence based SAAS provider based out of Bengaluru, has filed draft red herring prospectus (DRHP) for its proposed Rs.850 crore IPO. Capillary Technologies provides its solutions across more than 30 countries currently. Software as a solution or SAAS is the in-thing which enables IT companies to delivery business solutions to clients in a scalable and cost effective manner.
The proposed IPO of Capillary Technologies will comprise of a fresh issue of Rs.200 crore and an offer for sale (OFS) of Rs.650 crore taking the total size of the issue to Rs.850 crore. The fresh issue component of the issue will be utilized for repayment of debt and also to invest in product development. Some of the monies will also be used for inorganic growth. The OFS portion is to give an exit to promoters and some of the early investors.
Capillary Technologies is backed by marquee private equity investor names like Warburg Pincus and Sequoia Capital. However, both these PE funds will not be offering their shares in the OFS of the company. Capillary also plans to do a pre-IPO placement of approximately Rs.20 crore ahead of the IPO. If this pre-IPO placement is successful, then the size of the IPO would be reduced proportionately by the company.
Capillary Technologies is one of the new age companies on the cutting edge of this shift to digital strategies. It provides its AI based SAAS solutions to over 250 brands across the globe and its clients are broadly based out of 30 countries including the US, China, Saudi Arabia, UAE, Singapore, Indonesia, Malaysia and Thailand. For FY21, Capillary has made net profits of Rs.16.90 crore on revenues of Rs.114.90 crore implying net margins of 14.71%.
Regarding the timing of the issue, we need to wait for the approval of SEBI, which normally takes 2-3 months from the filing of the DRHP. The actual issue process of Capillary Technologies will only start after that. ICICI Securities, Kotak Mahindra Capital and Nomura Financial Advisory, who will act as the book running lead managers to the issue.