Capillary Technologies, a leader in AI-driven customer engagement and loyalty solutions, has received board approval for a ₹2,250 crore (~$263 million) initial public offering (IPO). This move signifies a significant milestone for India’s enterprise SaaS sector.
IPO Structure and Objectives
The IPO will consist of a fresh issue of shares worth ₹500 crore and an offer for sale (OFS) of ₹1,750 crore. This structure provides an opportunity for long-term investors like Warburg Pincus, Peak XV Partners, and American Express Ventures to partially exit. The company plans to file its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) by June 2025, aiming for a listing by the end of the first half of FY25.
Company Background and Growth Trajectory
Founded in 2008 by IIT Kharagpur alumni Aneesh Reddy, Ajay Modani, and Krishna Mehra, Capillary Technologies has expanded its operations to over 30 countries, supporting more than 120 loyalty programs. Its clientele includes prominent brands such as Tata Group, Domino’s, Shell, Puma, Marks & Spencer, Indigo, and Al-Futtaim, highlighting its deep integration into enterprise ecosystems across Asia, the Middle East, and North America.
In the fiscal year 2024, Capillary reported a revenue of ₹600 crore, marking an 80% year-over-year increase. Net losses narrowed to ₹59 crore, reflecting a 33% improvement. The company projects FY25 revenue to reach ₹650 crore with EBITDA margins of 15%, a significant leap from FY21 revenue of ₹123 crore. This growth has been driven by a mix of organic expansion and strategic mergers and acquisitions.
Strategic Acquisitions and Market Positioning
Capillary has been active in expanding its capabilities through acquisitions. In 2023, the company acquired Canadian loyalty platform Kognitiv, adding over 30 enterprise customers and enhancing its personalization and data insights capabilities. This deal follows previous acquisitions of Persuade, Brierley, and Rewards+, positioning Capillary as a global player in the omnichannel loyalty market.
The company’s growth in the United States has been particularly noteworthy, with a fourfold increase over the past three years. This expansion has been driven by its cloud-based SaaS offerings, disrupting the traditional agency-led loyalty market. Capillary’s commitment to innovation is evident in its investment strategy, allocating 50-75% of incremental tech investment annually towards artificial intelligence. (businesswire.com)
Financial Backing and Employee Incentives
In 2023, Capillary raised $140 million (₹1,201 crore) in a Series D round, with $95 million constituting secondary share sales. The round brought new investors such as Pantheon, 57Stars, and Unigestion to its cap table. To align employee interests with the company’s growth, Capillary expanded its employee stock ownership plan (ESOP) pool by 123%, from 32.6 lakh to 72.91 lakh options, now accounting for 9.04% of the company’s share capital. The expanded pool is estimated to be worth around ₹212 crore, out of a total ESOP pool value of ₹384 crore. Of the company’s total funding, $20 million has been allocated toward employee payouts through ESOPs.
Regulatory Considerations and Market Context
Capillary’s parent company is incorporated in Singapore and owns 98% of the Indian operations. This holding structure could draw regulatory attention as SEBI and the Indian government scrutinize foreign ownership in tech startups, particularly in the context of outbound corporate structures and reverse flipping to India.
The planned listing comes amid a renewed wave of IPO activity in India’s tech and SaaS sectors. At least 20 startups—including Razorpay, Lenskart, Groww, Shiprocket, PhysicsWallah, boAt, and Urban Company—are reportedly preparing to go public in 2025. Against that backdrop, Capillary’s revival of its IPO strategy appears well-timed.
Conclusion
Capillary Technologies’ decision to proceed with its IPO without a pre-IPO round, targeting a valuation between $500 million to $1 billion (₹4,290 crore to ₹8,580 crore), reflects confidence in its growth trajectory and market position. As the company continues to expand its global footprint and enhance its technological offerings, the upcoming IPO marks a significant step in its journey within the enterprise SaaS landscape.
