Freshworks Plans $912 million IPO in the US Stock Markets
India’s own home-made rival to Salesforce, Freshworks, will shortly launch a $912 million IPO in the US markets, Freshworks will be targeting an overall valuation of $9 billion for the business. Freshworks started its journey in India, but is currently based out of California, the seat of the technology and digital revolution.
Freshworks raised its last round of financing almost 2 years back in November 2019. At that time, the company was valued at nearly $3.5 billion. The current valuation sought is nearly 2.6 times its 2019 valuation. However, the pandemic has made technology a lot more integral to business and such kind of value accretion is justified.
Freshworks counts a number of important PE players as its core investors. The list includes Sequoia Capital, Accel Partners and Tiger Global; all marquee investors in the digital space. Freshworks offers a broad range of business software tools that range from customer relationship management (CRM) to help-desk software. It has also built a SAAS (Software as a service) platform for some of its core customers.
As part of the IPO, Freshworks plans to offer a total of 28.5 million shares at a price range of $28 to $32. At the upper end of the price band, the IPO size works out to $912 million. For the first six months of 2021, Freshworks reported revenues of $169 million and a net loss of $9.8 million. However, the net loss has sharply narrowed from $57 million in the corresponding period last year.
What justifies this steep valuation then? One is the size of the opportunity. As per IDC, the addressable market for Freshworks is close to $120 billion so the headroom is huge. Secondly, it serves over 50,000 customers so the potential to deepen customer ROI is also substantial. Freshworks was co-founded by Girish Mathrubhootham.
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About Mr. Singhania Sunil Singhania, a Certified Financial Analyst (CFA), established Abakkus Asset Management Company (AMC) in 2018. His investment strategy is characterized by a well-diversified portfolio that encompasses both large and small firms, with a focus on companies exhibiting substantial growth potential.
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