Private equity firm Apax Partners has agreed to acquire a significant minority stake in Fractal Analytics for $200 million (Rs 1,400 crore) through a mix of primary and secondary share purchases.
The transaction will involve PE firm TA Associates and Malaysian sovereign wealth fund Khazanah Nasional Berhad selling their stake in Fractal. While TA Associates had first invested in Fractal in 2013, Khazanah had made its bet less than three years ago.
Fractal said in a statement it will use the money raised from the Apax Funds to accelerate growth, both organically and through acquisitions, and to invest in artificial intelligence products and research. It didn’t give a breakup of the primary capital it is raising and the secondary share sales by existing investors.
“Demand for AI is surging… The investment from the Apax Funds will accelerate our ability to scale and meet this rising demand globally,” said Pranay Agrawal, co-founder and CEO of Fractal Analytics.
Srikanth Velamakanni, co-founder and executive vice chairman of Fractal Analytics, said the company is marching towards its goal of $1 billion revenue in the AI segment.
Fractal’s ability to attract quality data science and engineering talent has allowed the company to stay at the forefront of the rapidly evolving analytics space, Apax India head Shashank Singh said, explaining the rationale for the deal.
Rohan Haldea, partner at Apax, said the data and analytics sector is growing rapidly as companies increasingly see it as a core strategic function of their business. Fractal will scale this business further, Haldea said.
Fractal got its first external funding in October 2008 from early-stage investor Kae Capital and its founder Sasha Mirchandani. In June 2013, TA Associates invested Rs 129 crore ($22.07 million then) for a 25% stake through a mix of a fresh share issue and a secondary share purchase. The transaction valued Fractal at Rs 520 crore.
In 2014, Canadian loyalty management firm Aimia Inc. picked up a 3% stake in Fractal.
In April 2016, Khazanah invested $100 million (Rs 667 crore then) in the company for a 36% stake through a combination of a fresh issue and a secondary transfer of shares. TA Associates sold a 7% stake in the company to Khazanah at the time, earning an estimated three-fold return from the partial exit. Fractal’s valuation tripled from the previous round of funding.
Fractal Analytics has grown over the past few years on the back of acquisitions and an aggressive organic growth strategy.
One of its key competitors is MuSigma Business Solutions Pvt. Ltd, the local subsidiary of US-based MuSigma Inc.
Founded in 2000, Fractal provides business analytics services through big data. It offers marketing analytics, forecasting, pricing and promotions optimization services and consumer insights. It caters to retail, insurance, technology, financial services and consumer goods sectors.