India's Fractal Analytics gets SEBI nod for country's first AI-focused IPO

The Securities and Exchange Board of India (SEBI)has approved Fractal Analytics' draft initial public offering papers, paving the way for the country's first IPO by an AI-focused company, according to a notification on the market regulator's website on Monday.

Fractal Analytics' 49 billion rupees (about $563 million) IPO comprises a fresh issue of up to 12.79 billion rupees and a sale of shares worth 36.21 billion rupees by existing investors.

Proceeds from the issue will be used to repay debt at its U.S. subsidiary, set up new offices in India and fund research and development, with a focus on generative artificial intelligence.

The company plans to maintain high R&D spending ahead of the IPO, Chief Executive Officer Srikanth Velamakanni had told Reuters last week.

Nearly three-quarters of the IPO will serve as an exit route for big investors, with TPG Fett Holdings seeking to offload shares worth up to 20 billion rupees and Apax Partners' Quinag Bidco planning to sell shares worth up to 14.63 billion rupees.

The Mumbai-based AI and analytics company counts some of the world's largest technology and consumer firms, including Microsoft, Apple, Nvidia, Alphabet , Amazon, Meta and Tesla, among its clients, the draft IPO papers showed.

Fractal Analytics' co-founders, group CEO Srikanth Velamakanni and CEO Pranay Agrawal, together with their families, own about 20% of the company and are not participating in the offer for sale.

Morgan Stanley India, Goldman Sachs (India), Kotak Mahindra Capital and Axis Capital are among the book-running lead managers for the IPO.