Freshworks plans $912 mn IPO at nearly $9 bn valuation

Freshworks Inc. aims to raise nearly $1 billion through a public listing in the US at a valuation of almost $9 billion, which will make it the most valuable software-as-a-service (SaaS) startup from India.

In its latest filing with the US Securities and Exchange Commission (SEC) on Monday, Freshworks said it plans to offer 28.5 million Class A common shares at a price range of $28 to $32 per share. With this, the unicorn will look to raise between $798 million and $912 million through the initial public offering (IPO).

Freshworks will seek a valuation of almost $9 billion at the upper end of the price band, the filing showed. This will make Freshworks the most valuable SaaS startup from India, post-listing, zooming past the likes of application program interface (API) development platform, Postman, which was recently valued at $5.6 billion and mobile application testing platform, BrowserStack valued at $4 billion this year.

Freshworks was last valued at $3.5 billion in November 2019.

The company last month made its first filing with the US SEC for the IPO.

“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 latest filing.

“Outstanding shares of Class B common stock will represent approximately 98.9% of the voting power of our outstanding capital stock immediately following this offering, with our directors, executive officers, and principal stockholders representing approximately 78.3% of such voting power,” according to the latest filing.

Freshworks follows a dual headquarter model between San Mateo, California, in the US and Chennai in India. Founded in India, most of Freshworks’ technology and operations team is based in the country.

The 11-year old startup has hired Morgan Stanley, JP Morgan, BofA Securities, Jefferies and Barclays, among others, to manage the share sale.

Mint reported earlier that Freshworks was looking to use the proceeds from the IPO for general corporate purposes, including working capital needs, operating expenses and capital expenditures. It will also use a portion of the net proceeds for acquisitions or strategic investments in complementary businesses, products, services or technologies.

“Freshworks is a very special company. We were unconventional from the beginning, not for its own sake, but because we saw an opening in the market for a unique approach... We offered a ‘fresh’ approach relying on efficient, product-led, low-cost, and low-touch sales; and we targeted massive, underserved markets. And we had one simple mantra: happy employees create happy customers. In fact, we made that our mission,” Freshworks’ founder Girish Mathrubootham said in a letter, as a part of the IPO filings.

Freshworks will be the first to lead the pack of Indian startups actively looking to list on the US exchanges in the coming months. The others include payments service provider Pine Labs, Walmart-owned online retailer Flipkart and mobile advertiser InMobi.

Freshworks has raised more than $327 million in funding so far from Accel, CapitalG, Sequoia India, and Tiger Global Management. It has more than 52,500 customers across 120 countries.

The company reported a 45% growth in revenue in 2020 to around $250 million. Loss, however, increased 84% during the period to $57.3 million.

The company is making efforts to pare its losses in 2021. For the six months ended 30 June, the company’s loss sharply narrowed to $9.84 million from $57 million in the previous year.