UK-based data analytics platform Quantexa is looking at acquisitions to help accelerate expansion ahead of a possible Series F round, and could consider an IPO in a couple of years, co-founder and Chief Operating Officer Imam Hoque told Mergermarket.

Quantexa, which is set to reach GBP 80m in annual recurring revenues (ARR) by the end of 2024, is researching a couple of potential acquisition targets in Europe in some detail, he said, and also has a larger pipeline of potential targets.

It is interested in targets that fit strategically and bring either new technical capabilities or a foothold into new vertical sectors or proposition areas, Hoque said. As an example, it could be interested in candidates that would accelerate its expansion in the credit risk in banking space, he said, adding that this could either be an acqui-hire or a target with a related piece of technology.

The company, which is selective about acquisitions has an in-house M&A team scouting potential targets and also receives regular inbound approaches, Hoque said.

Quantexa, which raised a USD 129m Series E round last year at a unicorn valuation of USD 1.8bn, could finance acquisitions of companies generating “a couple of million” in revenues from internal resources, he said. However, for targets generating more than around EUR 20m in revenue, the company could look to do a Series F round to finance M&A, he said.

A Series F round could also fund faster organic growth in adjacent geographies, proposition areas or sectors, he said. However, there is nothing on the horizon yet and the company usually considers things nine months in advance, so a Series F is looking less likely to take place this year, he added without disclosing its potential size.

Quantexa could also consider an IPO in the future to raise funds to finance an acquisition or organic expansion in a new market, rather than to offer shareholders an exit route, Hoque said, adding that it is keeping all options open, including an IPO, staying private or selling to a strategic or a private equity investor.

The company is regularly courted by strategic investors and private equity firms, Hoque said, and also by bankers. It is having initial conversations, but has not issued any mandates for an IPO, he added.

A listing in a couple of years could make sense, but Quantexa is probably not yet IPO-ready and would first need to grow its revenue run rate, due to lower valuations compared to a couple of years ago, Hoque said. A decent IPO valuation is generally thought to be around USD 3bn to USD 5bn, he said, and at its current valuation, the company would likely need to be generating a couple of hundred million dollars in revenue, he said. The company expects its valuation to grow as it pursues its growth pipeline, he added.

No decision has been made about an IPO venue, but given the company’s heavily UK-based management team, the London Stock Exchange would be an attractive option depending on shareholders and the valuation achieved, Hoque said, adding that the US would also be an option.

In the meantime, the business has been ensuring that its accounting and reporting systems and board structure are in the right shape, which make it better prepared in case of a listing, he said.

Hoque told Mergermarket in April 2023 that Quantexa was looking at acquisitions and saw itself as a potential market consolidator in the decision-intelligence technology space. It had acquired Aylien, an Irish natural language processing software firm with an estimated USD 9.1m in sales, earlier in 2023 for undisclosed terms, as previously reported.

The business will also grow via geographic expansion, selective expansion into new segments and broadening its proposition with existing clients, Hoque said, naming Japan, the Middle East, South East Asia and Australia as examples of markets with strong growth potential.

Its growth is fuelled by the growing decision-intelligence market, which is worth GBP 400bn according to a proprietary Gartner study commissioned by Quantexa, a company press release said. Organisations have to adapt to the speed of change and increasingly require data in shape to make decisions or create statistical models, Hoque, who is also Global Head of Product Management, added.

Founded in 2016, Quantexa offers artificial intelligence, data and analytics software to help organisations manage risk and make operational decisions. It resolves challenges across data management, customer intelligence, Know Your Customer, financial crime, risk, fraud and security, throughout the customer lifecycle, according to a press release.

The company has customers in the banking, insurance, telecommunications, media, technology and public sectors, and more than 25% of the world’s 50 largest banks have deployed its technology, according to an announcement.

The financial services sector accounts for around 60% of its revenue, the government segment is growing fast, and the business has recently been expanding in the healthcare sector, Hoque said. Quantexa reported a 30% increase in ARR across its Data Management and FinCrime Solution suites in the year to March 2023, according to the press release.

Government intelligence services, including counter terrorism, defence intelligence and understanding geopolitical risks, is a growing segment for the company, Hoque said, adding that Quantexa’s solutions are used, for example, to help combat financial crime and in counter-terrorism.

Quantexa employs more than 700 people across 15 locations worldwide.