Local software-as-a-service startups firm up plans for initial public offers

Software-as-a-service (SaaS) companies seem to be coming off age, with several of them firming up initial public offering (IPO) plans to raise capital from the market.

Over the past month, two domestic SaaS startups, Rategain Travel Technologies and Freshworks, have announced their plans to launch initial public offerings.

According to merchant bankers, there could be more SaaS players hitting the IPO street, given the huge investor interest in the sector.

Rategain Travel Technologies, the largest domestic SaaS company in the hospitality and travel space, will be the first firm to get listed.

Rategain has filed the draft documents with Sebi, seeking to raise about Rs 1,200 crore.

Freshworks Inc, the Chennai and Silicon Valley-based SaaS provider founded by Girish Mathrubootham, last Friday filed for a USD 100 million IPO in the US and intends to list its class-A common stocks on the Nasdaq Global Select Market.

SaaS companies have been attracting huge investments and around USD 6 billion have been pumped into them so far, with over USD 4 billion coming in the past three years alone.

Of around 60 unicorns in the country today, 10 are from the SaaS space, with four having joined the coveted club this year alone.

"Indian SaaS is coming off age as companies have capitalised on its leadership in software development and customer-centricity to build world-class products, which are often superior to incumbent options.

"A powerful combination of seasoned enterprise tech founders coupled with a talented developer base has unlocked multiples of value for end-customers, giving Indian SaaS companies a competitive advantage," Sameer Nath, managing partner at Truescale Capital, said.

"Since many domestic companies focus on the US and other more evolved global markets, they are valued in line with premium SaaS peers,” he said.