Capillary Tech IPO: AI Startup's Big Debut Sees Slow Start – Investor Jitters or Strategy?

Author

Satyam Jha | Whalesbook News Team

Detailed Coverage:

Capillary Technologies, a Bengaluru-based Software-as-a-Service (SaaS) company, has commenced its Initial Public Offering (IPO) with a subdued reception on its opening day. By 13:10 IST, the issue was subscribed by only 10%, indicating cautious investor sentiment. Non-institutional investors (NIIs) led initial participation, with their portion 27% subscribed, while retail investors (RIIs) managed 17% subscription. Employee quota saw a stronger 55% subscription. Notably, Qualified Institutional Buyers (QIBs) had not yet placed any bids. Prior to the public launch, Capillary Technologies secured INR 393.9 Crore from anchor investors, including prominent mutual funds. This anchor book allocation signals institutional confidence. The IPO, priced between INR 549-577, aims to raise approximately INR 877 Crore. This comprises a fresh issue of INR 345 Crore for growth, debt repayment, and enhancing its AI platform, and an Offer-for-Sale (OFS) where promoters will divest shares. Capillary Technologies specializes in AI-driven SaaS for customer engagement and loyalty, serving over 410 brands globally. Financially, it reported a net profit of INR 13.3 Crore in FY25, a turnaround from FY24's loss, with revenue growing 14%. Impact The initial muted subscription might affect listing performance. However, strong anchor backing and financial turnaround could attract QIBs. Successful fundraising could fuel its expansion. Rating: 6/10 Difficult Terms IPO (Initial Public Offering): The process by which a private company offers its shares to the public for the first time, becoming a publicly traded company. SaaS (Software-as-a-Service): A software distribution model where a third-party provider hosts applications and makes them available to customers over the Internet, typically on a subscription basis. NIIs (Non-Institutional Investors): Investors who apply for shares worth more than INR 2 Lakhs in an IPO. This category includes high-net-worth individuals and corporate bodies. RIIs (Retail Individual Investors): Individual investors applying for shares up to INR 2 Lakhs in an IPO. QIBs (Qualified Institutional Buyers): Large institutional investors like mutual funds, foreign institutional investors, banks, and insurance companies that are registered and regulated by SEBI. OFS (Offer-for-Sale): A mechanism where existing shareholders of a company sell their shares to the public as part of an IPO or a subsequent offering, rather than the company issuing new shares. Anchor Investors: Large institutional investors who commit to buying shares before the IPO opens to the public, providing a degree of stability and confidence to the issue.