India's Fractal Analytics eyes up to $1.6 billion IPO valuation, aims to be first AI-focused listed firm

By Haripriya Suresh

Feb 4 (Reuters) - Indian enterprise artificial intelligence firm Fractal Analytics FRAL.NS is targeting a valuation of up to 144.5 billion rupees ($1.60 billion) in what will be a scaled-down initial public offering.

The IPO positions the company to become the country's first pure-play AI-focused firm to list on stock exchanges and potentially set the benchmark for the technology.

Fractal's latest valuation is lower than what it was valued at in the previous financing round, and the company also cut its issue size by over 40%.

The company was advised to leave money on the table as AI is a new category for investors, Fractal CEO Srikanth Velamakanni told Reuters on Wednesday.

"Investors don't understand AI right now. [We were told to] make sure that you price your IPO attractively enough for all of us who are new to the category to come and invest and learn from it and grow from it," he said.

The company, which has set a price band of 857-900 rupees per share for its IPO, will list on the Indian bourses on or about February 16.

Existing shareholders have also reduced the number of shares on offer in the IPO, which Velamakanni said was because they didn't want to sell at the current price.

Founded in 2000, the Mumbai-based AI and analytics company counts some of the world's largest technology and consumer firms such as Microsoft MSFT.O and Alphabet GOOGL.O among its clients, according to its prospectus.

It is set to list in a subdued domestic primary market this year. Only three companies launched mainboard IPOs in January, down from 10 in December, amid weak market conditions driven by trade and geopolitical uncertainties.

Velamakanni brushed off uncertainty around tech spending, saying that those budgets are being reoriented towards AI.

Fractal is looking to use a part of its IPO proceeds to acquire companies that have built a "defensible, licensable business" around AI products, and also companies with capabilities in life sciences, as it looks to build its expertise in the area, Velamakanni said.

($1 = 90.4270 Indian rupees)