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Apax Partners is said to near $400M deal for Fractal

(Bloomberg) --Apax Partners is in advanced talks to acquire a stake in Fractal Analytics Inc., a provider of machine learning and artificial intelligence services, people with knowledge of the matter said.

Apax is discussing a deal, which could be valued at about $400 million, to buy stakes from existing shareholders, the people said, asking not to be identified because the information is private. The company is also discussing injecting fresh capital into Fractal, which would make Apax the majority shareholder, they said.

The technology firm is seeking investment to help fuel new growth, and is actively looking for acquisitions, one of the people said. Some of its current shareholders may exit as part of the deal, the person said.

There’s no guarantee that the buyout firm will contribute more funds to Fractal as part of the deal, which would leave the buyout firm as a significant minority holder, one of the people said. Representatives for Apax and closely held Fractal declined to comment.

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The Shadow Dexterous robotic hand. Photographer: Luke MacGregor/Bloomberg

Fractal, which counts Alphabet Inc.’s Google and Wells Fargo & Co. among its clients, helps customers get answers from the increasing quantities of data they collect using artificial intelligence, a market which International Data Corp. forecasts will grow to $52 billion by 2021. The purchase of a stake in Fractal, which has about 1,200 employees, mostly in India, will add to Apax’s approximately $2 billion investment in Asia’s third-largest economy.

“Specialized providers who bring together business competencies, analytics assets, ecosystems and talent together are potentially valuable partners for businesses,” said Leslie Joseph, a Bangalore-based principal analyst at Forrester Research Inc. Companies that can apply insights at scale to create competitive barriers will grow 8 to 10 times faster than the global economy, he said.

Co-founded by Srikanth Velamakanni and Pranay Agrawal, Fractal is backed by U.S. private equity firm TA Associates, Malaysia’s sovereign wealth fund Khazanah Nasional Bhd., Aimia Inc., a Canadian frequent-flier program operator, and Gulu Mirchandani, founder of India’s MIRC Electronics Ltd., according to the company’s website.