Fresh from its acquisition by Ebix Inc, a deep-pocketed and cash-rich software firm based in the US, payments company ItzCash Card Ltd is now looking at inorganic opportunities to grow its business, its managing director Naveen Surya told VCCircle.
The Mumbai-based company—which has three verticals, viz. digital payments, remittances and financial services—is planning to foray into SME lending and international remittances.
Elaborating on ItzCash's strategy, Surya said that following its acquisition by Ebix, the company has hit the gas on buyouts. That's a departure from its earlier plan, where it was trying to gradually build businesses through partnerships.
Ebix chairman Robin Raina has advised us to go on a buying spree, Surya said.
"In last 10 days, we have met about 20 companies in these areas, and we are only going to extend those discussions and go aggressive. One big change, after the Ebix deal, is the inorganic approach to build new businesses and scale it up a lot more faster," he added.
ItzCash offers prepaid cards, money transfer and wallet services to retail consumers and provides cash management services and gifting solutions to corporate houses. The company, which has a presence in 3,000 cities and at 75,000 brick-and-mortar distribution outlets, has been growing at a compounded annual rate of 35%, and is the only player in the space that's profitable. ItzCash claims to process about 600,000 transactions a day and $2 billion in annual payment volume.
SME lending push
The company claims to be already working with around 1 lakh small and medium-sized enterprises (SMEs). "These SMEs pay us in advance by borrowing the money from friends and families and they are always in need of funds. These people have relationships with us for 1-10 years, which means we have data on them in terms of their business, how much they earn from us, their behaviour pattern and so on. In our model, we already have a customer base and data; all we need is somebody who can assess the data from a credit-scoring perspective," Surya said.
Hence, ItzCash plans to acquire a technology-enabled platform with solid data analytics capabilities, which also can participate in the loan book, he added.
In the SME lending space, the company is already running pilots with Indifi and two other players. When asked if one can expect ItzCash to acquire one of these pilot partners, Surya reserved his comment.
Fin-tech in general, and online lending in particular, has seen a lot of traction in India of late. A recent VCCircle analysis shows that since the beginning of the year, at least 11 online lending startups have raised venture funding.
Already a leader in the domestic remittances market, ItzCash is looking to capture a share of the international inward remittances (i.e., money sent to India from abroad) pie.
"We won’t be like a Western Union, but more like a partner to them in India. Our aim is to cut down layers, and go slightly up in the value chain as it will boost our margins and increase our control on the product," Surya explained.
Besides, ItzCash is also looking to foray into international markets by leveraging the strength of its parent Ebix. "Ebix is present in 40-50 countries and processes $100-billion worth of insurance policies. Starting next year, we will look at what role we can play in some of those countries using our solutions. Now, that we are fairly good in India, we will focus on becoming a global company," Surya added.
Clearly, the next few months are likely to see many acquisitions, investments and partnerships by ItzCash.
In February, the company made an undisclosed equity investment in Bangalore-based expense management firm Finly.
Budgeting for buys
Capital is unlikely to be an issue, said Surya, adding parent Ebix has a market cap of $2 billion and deep access to the US market. Ebix reported more than $300 million in revenue last fiscal and nearly $100 million in net profit. There’s cash lying in their books every year, Surya said.
ItzCash has given its investors 2-3 times return on investments via the Ebix deal.
The road ahead
Of its three business verticals, financial services, which was earlier part of payments, is now the company's key focus area. Both payments and remittances are fairly equal in terms of revenue, volumes, and profitability, according to Surya.
As for payments, ItzCash claims to be the largest player in travel, controlling 12% market share on IRCTC, a subsidiary of the Indian Railways that handles its catering, tourism and online ticketing operations. In the Direct to Home TV segment, ItzCash again claims to be the leader, thanks to the Essel Group advantage. And, in the utility segment, it claims to process 20-30% of BSES' overall online payments.
So far, the company has been collecting cash for merchants and corporates through its wallets or prepaid cards. "This year, we are planning to go to our merchants on a select-only basis where we will not collect cash, but also collect money from debit/credit card, net banking, UPI, BHIM, etc," Surya summed up.