Hospitality SaaS company Rategain aims to mop up Rs 1,300 cr via IPO

Hopes to regain pre-Covid level of $60 million ARR in FY22

Hospitality SaaS (software as a service) company Rategain has fixed the price band for its initial public offering at Rs 405-425, and aims to mop up at least Rs 1,290 crore from the public market. The IPO consists of a fresh issue of Rs 375 crore and an offer for sale of 22.6 million shares. At the lower end of the price band, the company’s valuation is around Rs 4,700 crore.

The company’s anchor book will open and close on December 6. The IPO will open on December 7 and close on December 9.

The promoter group, consisting of founder and CMD Bhanu Chopra and his family’s stakes, will see their shareholding of the company reduce to 55 per cent after the IPO from above 65 per cent currently. Wagner, which is an investor in Rategain, will see its stake decrease from over 22 per cent to 15 per cent after the issue.

“As far as we can tell, Rategain is the first SaaS company to list in the Indian market. I think the Indian market has matured a lot in the last few years and it has always been our wish to not only build from India, but also be listed here,” said Chopra.

The company saw a hard time during Covid last year as it had to forego payments on advance subscription bookings from hospitality customers as lockdowns brought their cash flows to zero. Its ARR (annual recurring revenue), one of the most important metrics in the SaaS industry, was around $63 million in March last year and is currently in the range of $52-53 million. “We are hoping to hit the pre-Covid levels of ARR within this fiscal year if all goes well,” said Chopra.

The company currently has around 1,400 customers globally -- while 65 per cent of its revenues come from the North American market, 15 per cent is accounted for by the European market and 2 per cent from India.

“This does not mean we are not focussed on India. It’s just that dollar and pound rates make the revenues from India look small,” clarified Chopra. He said while the company’s cash cows currently are DaaS (data as a service) and distribution products, its marketing tech offering is growing the fastest as it allows hotels to reduce customer acquisition costs and automate marketing campaigns.

The company plans to use the money raised from the IPO towards paying off some of its debt and for inorganic growth. “We have acquired three companies in the past three years and are looking for more such opportunities,” said Chopra.

Rategain said that its net loss on the balance sheet is a reflection of the amortisation of past acquisitions and not its financial performance. “We are EBITDA positive with a healthy cash flow and the loss on the balance sheet is just a result of accounting norms. Anyways, it will only help us save money on taxes,” added Chopra.