21% of the proceeds from the new issue are for debt repayment

Earlier this week, it filed its DRHP for its IPO to raise up to INR 850 Cr IPO

The offering includes a new issue of shares worth INR 200 Cr and an SFO of INR 650 Cr

It will use INR 72 Cr for the development of new product offerings and improvement of internally generated software

SaaS startup Capillary Technologies, based in Bengaluru and Singapore, has recently filed its Draft Red Herring Prospectus (DRHP) for its Initial Public Offering (IPO). It plans to use about 21% of the proceeds from the new issue of the IPO for debt repayment.

The 850 Cr INR IPO includes a new issue of shares with a maximum value of 200 Cr INR and a sale offer by parent company Capillary Technologies International PTE Ltd (CTIPL), the Singaporean parent company of Capillary Technologies .

Capillary will only receive the proceeds from the new share issue as net proceeds.

In its DRHP, the SaaS major said that it intends to use nearly INR 42 Cr of the net proceeds for repayment or prepayment of all or part of certain outstanding loans taken by the startup, which represents approximately 21% of net income. of INR 200 Cr.

As of November 30, 2021, Capillary had a total outstanding borrowing of 45.69 Cr INR. The startup owes nearly INR 25.22 Cr to RBL Bank, and another INR 20.47 Cr to Innoven Capital India.

“We believe that such repayment or prepayment will help reduce our outstanding debt and debt servicing costs and allow the use of internal accrued liabilities for new investments in the growth and expansion of our business. company,” he said.

Additionally, Capillary said the repayment would improve its ability to raise additional resources in the future to fund potential business development opportunities.

The startup plans to use 36% or INR 72 Cr of the net proceeds of the new issue for developing new product offerings and improving internally generated software.

This would include using 23 Cr INR to invest in cloud infrastructure and 34 Cr INR to invest in developing new product offerings. It would also include another INR 15 Cr to invest in hardware products, DRHP said.

Furthermore, the SaaS startup will use INR 30 Cr for strategic investments and acquisitions, said this draft prospectus.

In September 2021, Capillary had made a strategic investment under which it acquired Persuade Loyalty, LLC and Persuade Holdings, Inc and completed its first acquisition in the US market. He said the acquisition gives him a broad presence in the US market and access to his customer base.

“We plan to grow the business through Persuade and Capillary’s product offerings and network capabilities and expand its team across technology, sales and network,” he said.

He further stated that the remainder of the net proceeds would be used for his general purposes, as approved by our management, from time to time, subject to such use for general corporate purposes not exceeding 25 % of net proceeds.

Capillary Technologies recent financial data

Capillary, linked to the IPO, is among the few for-profit startups that want to go public. The SaaS giant’s net profit increased 82x to INR 16.94 Cr in FY21 from INR 20.6 Lakh in FY20, Capillary said in its DRHP.

The startup’s total revenue, however, decreased by 26.5% to INR 123.15 Cr in FY21 from INR 167.59 Cr in FY20. Its operating revenue fell 30.8% in the reporting period to INR 114.9 Cr from INR 166.12 Cr in FY20.

The SaaS startup also saw lower spending in FY21. It reported a total expenditure of INR 106.21 Cr in FY21, 36.5% less than the INR 167.39 Cr spent a year ago.

Its net profit for the first quarter (April-June) of FY22 was INR 2.52 Cr, while its total revenue was INR 33.7 Cr in the quarter.

Operational revenue in Q1FY22 was INR 33.16 Cr, it said in the DRHP filing.

The draft prospectus shows that its outstanding debt stands at almost INR 83 Cr. Capillary intends to use approximately INR 42 Cr of the net proceeds to repay the debt.

Hair IPO | The INR 850 Cr offer

The startup’s offer includes a new share issue worth INR 200 Cr and a sell offer worth INR 650 Cr.

Parent company CTIPL will be the sole selling shareholder in the IPO.

The development comes nearly two months after Inc42 exclusively reported on Capillary Technologies’ plans for a domestic IPO.

In accordance with the DRHP, Capillary Technologies, in consultation with the BRLMs (Book Running Lead Manager), may consider a pre-IPO placement.

The startup has yet to disclose its pre-IPO placement amount. However, he said that if the pre-IPO placement is completed, the new issue will be reduced to the extent of the pre-IPO placement.

Although Capillary Technologies is backed by Pincus de WarburgSequoia Capital, Avataar Capital and Filter Capital among others, it is a 100% subsidiary of CTIPL.

Founded in August 2008 by IIT Kharagpur alumni Aneesh Reddy and Krishna Mehra, Capillary Technologies is a omnichannel engagement and commerce solutions startup.

It claims to have a stronghold in India, Southeast Asia, MENA, China, among other countries. The startup offers more than 100 loyalty programs, has more than 120,000 stores and more than 500 million consumers. Over the years, he has raised over $100 million in funding.

Tana T. Thorsen