Fractal Analytics Gets SEBI Nod to Launch India’s First AI-Focused IPO

After capital markets regulator SEBI approved Fractal Analytics' initial public offering (IPO), India is about to see its first real AI startup listed on the public markets. The company is comparable to Palantir, the US-listed analytics and decision-intelligence corporation, and has spent 25 years developing a global enterprise AI business from Mumbai and New York. At a time when interest in artificial intelligence is almost at its peak worldwide, the first pure-play AI IPO is scheduled to go public in December.

How Fractal Plan to Lauch its IPO?

While current owners, such as Quinag Bidco, TPG Fett Holdings, Satya Kumari Remala, Rao Venkateswara Remala, and the GLM Family Trust, will sell up to INR 3,621 crore worth of shares, Fractal intends to raise INR 1,279 crore through a new share offering. According to Bloomberg, the entire transaction might be worth around $3.5 billion for the business.

The offering's book-running lead managers are Kotak Mahindra Capital, Morgan Stanley India, Axis Capital, and Goldman Sachs India. The funds from the new issuance will be used by the company to scale its generative AI products, improve its US subsidiary, pay back loans, open offices in India, engage in R&D, and look for acquisitions. In order to remain competitive in a rapidly changing industry where models, compute requirements, and business use-cases are all increasing at the same time, Fractal's CEO told Reuters that the company will maintain and maybe boost its current high research spending. Investor interest in the IPO is also high because of broader global dynamics.

Over the next ten years, it is anticipated that global spending on AI will increase significantly as businesses and governments construct new data centres, edge computing systems, and AI-enabled infrastructure. In this change, India has become a significant market.

Business Operations of Fractal

Fractal, which was founded in 2000 by Pranay Agrawal and Srikanth Velamakanni, is solely focused on enterprise AI. It does not create public chatbots or introduce consumer-facing products such as ChatGPT. Rather, it creates the engines that improve the way big businesses think. Pricing, supply chain efficiency, medical diagnostics, marketing customisation, financial risk modelling, retail planning, and dozens of other corporate procedures are all enhanced by its solutions.

The organisation has developed models and platforms that integrate into its clients' workflows to enable them to operate their enterprises more precisely and quickly. The closest an Indian tech company can come to Palantir, which also develops decision systems for major government and corporate clients, is with its "invisible AI" concept. Both businesses operate in fields where AI is applied extensively rather than superficially, rely substantially on data, and develop platforms rather than single solutions.

While Fractal offers products like Fathom, Qure.ai, Crux Intelligence, and Fractal Alpha, Palantir offers Foundry and Gotham. A limited number of major international clients account for a sizable portion of both businesses' revenue. In the US, where its clientele includes Microsoft, Apple, Nvidia, Alphabet, Amazon, Meta, and Tesla, Fractal generates over 60% of its sales. The enthusiasm surrounding its IPO has been largely fuelled by that clientele.