In January, US private equity firm Haveli Investments announced the acquisition of a controlling stake in contract software company Sirion Labs, valuing it at around $1 billion. Private equity firms are accelerating control deals in the software-as-a-service space, taking a potential bet on artificial intelligence (AI)-led shakeout of the industry driving down valuations and creating a buyer’s market for profitable companies.
Over the past year, multiple mid-to-late stage SaaS companies have seen majority stake purchases by private equity or have consolidated internally in what is a shift from the typical venture-led growth rounds from a few years ago.
In January, US private equity firm Haveli Investments announced the acquisition of a controlling stake in contract software company Sirion Labs, valuing it at around $1 billion. Sirion’s rival, SoftBank-backed Icertis, is also exploring a potential sale, as per a Bloomberg report.
Prior to this, in January last year, Everstone Capital acquired a majority of bootstrapped marketing technology SaaS provider Wingify – which, in turn, has agreed to buy Paris-based rival AB Tasty earlier this year for around $150-200 million.
In April last year, Goldman Sachs Asset Management acquired HR SaaS player PeopleStrong from existing backer Multiples PE. Homegrown private equity firm Kedaara Capital, which has made investments in several software companies, last year made a strategic $350-million investment in data analytics solutions provider Impetus Technologies to create a cloud data and AI-readiness platform, positioning it as a consolidation vehicle for enterprise data modernisation.
Founders, executives and investors in this space told ET that as SaaS valuations reset against the backdrop of “SaaSpocalypse” caused by the launch of coworking tools by frontier model companies like Anthropic, a new wave of consolidation could be underway. The thesis, these people said, is to acquire companies with predictable revenues and strong AI engineering talent at lower multiples, roll them up into larger platforms, and scale globally.
Sparsh Gupta, cofounder and CEO of Wingify said: “SaaS has come of age. Now we are seeing the next phase…consolidation, public listings, private equity participation, and strategic acquisitions.”
He added that the sector is entering the stage where PE typically steps in, targeting stable businesses at more rational valuations.
“It’s harder to achieve cost arbitrage if you’re consolidating only within high-cost geographies like Silicon Valley or parts of Europe. But combining global go-to-market strength with Indian engineering leverage creates a strong financial use case,” Gupta said.
Game changer
Following the go-go period of 2021 and early 2022 – which also saw companies such as Freshworks list on the exchanges – public SaaS multiples have been compressed, dragging private valuations down with them.
Freshworks, which had listed at a valuation of $10 billion in 2021, currently has a market cap of $2.1 billion-$2.5 billion.
On top of this, generative AI is eroding feature differentiation across categories. Reporting layers, customer support workflows and even parts of product development are now being automated or rebuilt using models.
AI tools are reducing feature differentiation across categories. Smaller point solutions are increasingly vulnerable.
Mukund Jha’s vibe coding startup Emergent’s CEO which crossed $100 million in annualised run rate (ARR) within eight months of launch said AI will replace large swathes of “soft value” software. His firm recently rebuilt its internal support system using an AI agent rather than buying an external tool. “Software building software is increasingly viable,” he said.
For private equity investors, this disruption is creating an opening. McKinsey’s analysis of 2025 deal flow reveals that private equity-led transactions now account for more than half (52 per cent ) of all buyout-backed activity in the software sector globally.
“If you look at the US, there are far more PE-led SaaS transactions than in India right now but India is following that curve. Even at Capillary, we’ve been buying some of our competitors with the same mindset,” said Aneesh Reddy, founder and CEO of Capillary Technologies, which went public in India last year.
The company has been on a streak of acquiring competition with its fifth buyout – of Mastercard-owned merchant loyalty management platform SessionM – being announced in February. As a private company, Capillary was backed by Warburg Pincus.
Capillary had listed with a market cap of ₹4,576 crore and is currently trading at a value of ₹4,077 crore.
Investors, however, cautioned that the consolidation wave is still early. “There is conversation. There is interest. But actual large-scale execution is still limited,” said managing partner at Avataar Ventures, Mohan Kumar. He added that while it may sound like SaaS is dying, AI will eat everything, and private equity is aggressively rolling up the ecosystem, it is more nuanced.
“India behaves very differently from the US due to labour economics. We need to look at each segment carefully instead of painting everything with one broad brush,” Kumar said.
Leave a Reply