Chennai startup to soon list on NASDAQ, plans raising $912 million through public issue

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Marquee global investors hold a stake in Freshworks ahead of the IPO. Accel, Tiger Global Management, CapitalG, and Sequoia Capital India are some of the investors of Freshworks.

Freshworks, a software as a service startup (SaaS) based out of Silicon Valley, is looking to raise $912 million from its initial public offering (IPO) on Wall Street. Started in Chennai, Freshworks moved to the United States to be closer to its customers, but still maintains a strong presence in Southern India. The company will be offering to sell 28.5 million Class A common stock at the fixed price range of $28 and $32 per share. Upon successful completion of the IPO, the company list on the NASDAQ under the symbol FRSH.

On the upper end of the price band, the company will raise $912 million while on the lower end the amount raised will be $798 million. Reports suggest that Freshworks is seeking a valuation of close to $9 billion, significantly higher than the $3.5 billion valuation that was pinned on it during the previous funding round in 2019. Freshworks will join companies such as Yatra Online, Azure Power and the most recent ReNew Power that was listed on NASDAQ through a SPAC.

“We have two classes of authorized common stock: Class A common stock and Class B common stock. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to 10 votes and is convertible at any time into one share of Class A common stock,” Freshworks said in its IPO filing. The company added that outstanding shares of Class B common stock will represent approximately 98.9% of the voting power of its outstanding capital stock immediately following the IPO. Of this, the directors, executive officers, and principal stockholders represent approximately 78.3%. 

The company plans to use the funds raised through the IPO for general corporate purposes, including working capital, operating expenses and capital expenditures. “We may also use a portion of the net proceeds for acquisitions or strategic investments in complementary businesses, products, services or technologies. However, we do not have agreements or commitments to enter into any such acquisitions or investments at this time,” Freshworks said.

Marquee global investors hold a stake in Freshworks ahead of the IPO. Accel, Tiger Global Management, CapitalG, and Sequoia Capital India are some of the investors of Freshworks. Although Freshworks is still a loss-making entity, it has shown strong growth in revenues while trimming losses. In the six months ending June 2021, the company had revenue of $168.92 million, up from $110.47 million in the same period last year. Net losses have narrowed down to $9.8 million from $57 million in the year-ago period. 

Wall Street has seen a large number of initial public offerings since the post-pandemic bull run began and a significant number of these have been technology companies. 

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