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Software-as-a-service (SaaS) company Capillary Technologies, which manages loyalty programmes for corporates, is acquiring US payments major Mastercard's loyalty and rewards business SessionM for $20 million in an all-cash deal.
This is the company’s fifth acquisition focussed on growing its loyalty and engagement suite, the company’s founder and CEO Aneesh Reddy told ET on Tuesday.
SessionM, which was acquired in 2019 by Mastercard, will bring over $35 million in annual recurring revenue (ARR). Capillary currently has an ARR of $82 million. The deal will add about 40% to Capillary’s ARR, Reddy said.
“Next year, we will cross the Rs 1,000 crore revenue mark with this acquisition. So it’s a large acquisition with very high value. Mastercard wanted to find a good home for this business.”
SessionM serves more than 40 enterprise customers, including five Fortune 500 companies. The acquisition will bring some of the world’s largest airlines and airports as well as quick service restaurant (QSR) chains, into Capillary’s portfolio. “Loyalty, especially in the US, is a red ocean. About 80% of major customers already have a loyalty platform,” said Reddy.
The acquisition will allow Capillary to focus on the food and beverage, airline, and retail segments while expanding its customer base in developed markets. The company will continue to explore inorganic growth opportunities in North America and selectively expand into Europe, it said in its investor presentation. Capillary went public in November 2025 after a Rs 878-crore IPO.
The North America loyalty market was estimated at $8 billion in 2024, making it one of the most evolved and competitive markets globally.
Reddy added that although the business was loss-making under Mastercard, Capillary will run it at near breakeven in the first year.
“Over the next few years, as we integrate customers onto our platform, it can become a 45% contribution margin business like our past acquisitions, where the migrations are completed.” he added.
North America accounts for about 55% of Capillary’s revenue at present. With SessionM being US-centric, that share will increase to roughly 59%. The acquisition also gives Capillary access to Canada and Latin America, along with markets such as Australia and Europe.
Post integration with Capillary’s platform, customers typically see their gross margins improve from around 30% to nearly 65%, per the investor presentation.
This margin expansion aims to improve profitability and cash flow generation, making Capillary’s acquisition strategy a four to five year payback play. The company expects its adjusted Ebitda to reach approximately Rs 398 crore by CY29.
Speaking about SaaS offerings seeing increased M&A deals, Reddy said that in the world of AI, modern platforms make it easy to build on top of them. “Companies that have very old tech stacks and high technology debt may find it expensive to rewrite their platforms. For them, it might make more sense to exit or sell.”
Capillary’s shares closed at Rs 512 on the NSE on Tuesday, down 2.43% compared with the previous trading session. The acquisition was announced after market hours.
This is the company’s fifth acquisition focussed on growing its loyalty and engagement suite, the company’s founder and CEO Aneesh Reddy told ET on Tuesday.
SessionM, which was acquired in 2019 by Mastercard, will bring over $35 million in annual recurring revenue (ARR). Capillary currently has an ARR of $82 million. The deal will add about 40% to Capillary’s ARR, Reddy said.
“Next year, we will cross the Rs 1,000 crore revenue mark with this acquisition. So it’s a large acquisition with very high value. Mastercard wanted to find a good home for this business.”
SessionM serves more than 40 enterprise customers, including five Fortune 500 companies. The acquisition will bring some of the world’s largest airlines and airports as well as quick service restaurant (QSR) chains, into Capillary’s portfolio. “Loyalty, especially in the US, is a red ocean. About 80% of major customers already have a loyalty platform,” said Reddy.
The acquisition will allow Capillary to focus on the food and beverage, airline, and retail segments while expanding its customer base in developed markets. The company will continue to explore inorganic growth opportunities in North America and selectively expand into Europe, it said in its investor presentation. Capillary went public in November 2025 after a Rs 878-crore IPO.
The North America loyalty market was estimated at $8 billion in 2024, making it one of the most evolved and competitive markets globally.
Reddy added that although the business was loss-making under Mastercard, Capillary will run it at near breakeven in the first year.
“Over the next few years, as we integrate customers onto our platform, it can become a 45% contribution margin business like our past acquisitions, where the migrations are completed.” he added.
North America accounts for about 55% of Capillary’s revenue at present. With SessionM being US-centric, that share will increase to roughly 59%. The acquisition also gives Capillary access to Canada and Latin America, along with markets such as Australia and Europe.
Post integration with Capillary’s platform, customers typically see their gross margins improve from around 30% to nearly 65%, per the investor presentation.
This margin expansion aims to improve profitability and cash flow generation, making Capillary’s acquisition strategy a four to five year payback play. The company expects its adjusted Ebitda to reach approximately Rs 398 crore by CY29.
Speaking about SaaS offerings seeing increased M&A deals, Reddy said that in the world of AI, modern platforms make it easy to build on top of them. “Companies that have very old tech stacks and high technology debt may find it expensive to rewrite their platforms. For them, it might make more sense to exit or sell.”
Capillary’s shares closed at Rs 512 on the NSE on Tuesday, down 2.43% compared with the previous trading session. The acquisition was announced after market hours.