AGS Transact Technologies Ltd, an ATM outsourcing and systems integration company, has raised Rs 145 crore ($32 Million) in private equity funding from TPG Growth. This fresh infusion into the company will help it fund the ATM outsourcing roll-outs on behalf of the banks such as Axis Bank, Corporation Bank, Dena Bank, Ratnakar Bank and Dhanlaxmi Bank.
Avendus Capital was the financial advisor for this transaction.
The PE funding for AGS Transact comes after the firm filed for an IPO with market regulator SEBI in September last year. However, the company has put its IPO plan on hold for the time being and withdrawn its IPO application from SEBI, a spokesperson for AGS told VCCircle.
AGS has under contract over 7,000 ATMs, under the brown label ATM outsourcing and managed services model. In addition, the company has installed more than 11,000 ATMs for over 70 banks in India. The currently installed base of 75,000 ATMs is expected to more than double, reaching 1,75,000 machines by 2015, the company said in a statement. According to its DRHP, AGS has also installed over 17,000 POS (point-of-sale) billing systems with customers like Future Group, Aditya Birla Retail, Carrefour and Globus.
Between FY07 and FY10, AGS Transact’s total income increased at a 3-year CAGR of 28.6 per cent, from Rs 146.56 crore to Rs 312.17 crore, with the PAT increasing at 37.9 per cent – from Rs 7.74 crore to Rs 20.3 crore.
Third-party outsourcing of ATMs and point-of-sales (POS) has become increasingly popular with banks as they expand their network while keeping costs under control. Incidentally, IndusInd Bank announced on Thursday that it had entered a POS outsourcing agreement with French information services major Atos Origin, which entered India by acquiring Venture Infotek Ltd in 2010 for $100 million.
Several other players in this space include Chennai’s Financial Software & Systems (backed by NEA & NYLIM Jacob Ballas), Mumbai’s Prizm Payments (backed by Sequoia) and global majors like First Data Corp and Fidelity National Information Service.
“India has very low per capita ATM penetration by global standards, with less than 70 ATMs per million people. We believe that expansion of their ATM networks is a key strategic initiative for Indian banks and expect the installed base to more than double over the next five years,” said Varun Kapur, partner and managing director, TPG Growth. Two representatives of TPG Growth will join the board of AGS Transact Technologies.
In the past, TPG Growth has invested in clean energy firm Greenko Group Plc., kids’ wear chain Lilliput and power system solutions firm KLG Power.