AGS Transact files for $216M IPO; TPG & Actis to get $144M in multi-bagger part-exit

Mumbai-based payment solutions and technology products provider AGS Transact Technologies Ltd has filed its draft red herring prospectus (DRHP) with securities market regulator SEBI for its initial public offer (IPO). The overall IPO size is Rs 1,350 crore ($216 million) which includes a fresh issue to raise Rs 400 crore ($64 million) besides an offer for sale by both its private equity investors TPG Capital and Actis besides its promoter.

This would mark the first IPO led by liquidity move for TPG and the second such for Actis in almost eight years. Actis had exited from Jyothy Labs during its IPO in late 2007, at the peak of the last bull market.

TPG spokesperson declined to comment.

Meanwhile, this is the third PE-backed firm to join the queue for an IPO after agri commodities-focused supply chain firm Shree Shubham Logistics Ltd and footwear maker and retailer SSIPL Retail Ltd, since January this year.

This is the second attempt by the firm to go public. Back in 2010, AGS Transact had filed its documents for its IPO but later withdrew it due to poor market conditions.

The IPO filing comes a month after it appointed Amit Majumdar as chief financial officer.

Here's a snapshot of the proposed IPO:

* Public issue size Rs 1,350 crore; Rs 400 crore through fresh share issue; offer for sale worth Rs 551 crore by TPG, Rs 349 crore by Actis and Rs 50 crore by promoters.

* Bankers: Axis Capital, Citigroup, HDFC Bank, ICICI Securities and Kotak Mahindra Capital.


* Founded in December 2002, AGS Transact provides payment solutions and technology products for the banking, retail and petroleum sectors. It offers customised products and solutions comprising ATMs and other automated payment products, related maintenance and managed services, cash management services and transaction switching services.

* The payment solutions provider operates in three segments—banking automation solutions, banking payment solutions and other automation solutions.

* It is promoted and led by Ravi Goyal who doubles up as chairman and managing director.

* As of December 31, 2014, the company had installed or serviced 41,569 ATMs and provided cash management services to more than 10,000 ATMs through its subsidiary Securevalue India Ltd. This unit's cash management services include cash pick up, cash in transit, cash vaulting and cash processing services for ATMs managed by it and by other operators. As of December 31, 2014, it provided cash management services through a fleet of 421 cash vans, 15 vaults and 75 spoke locations, covering 440 cities and towns in India. For the six months ended December 31, 2014, it replenished a daily average amount of Rs 295.94 crore.

* It has installed over 25,000 POS terminals, automated more than 5,000 petroleum outlets and installed more than 34,000 colour dispensing machines across the country. The operations covered more than 700 cities and towns, reaching out to more than 100,000 customers.

* The company has also recently started offering banking automation solutions and banking payment solutions to banks and financial institutions in Singapore, Cambodia, the Philippines and Indonesia.

* As part of its other automation solutions segment, it supplies automation products and provides implementation services, system integration, remote management and support and help desk services. Customers for its retail sector offerings include Bharti Retail, DLF Brands and Future Retail, while customers for its petroleum sector offerings include Indian Oil Corporation and Hindustan Petroleum Corporation. Its colour operations primarily comprise the manufacture and supply of automatic and manual paint dispensers and the supply of engravers and customers such as Asian Paints and Berger Paints India.

* In June 2014, it was authorised to function as a white-label ATM operator in India.


* AGS Transact has almost quadrupled its revenues since the year ended March 31, 2011. It roped in TPG as an investor in 2011. Its net revenues increased from Rs 243 crore in FY11 to Rs 948 crore in FY14. In the first half of this financial year, it generated net revenue of Rs 577.4 crore.

* In the same four-year period its EBITDA rose much faster from Rs 24.7 crore to Rs 133.5 crore. In H1 FY15, its EBIDTA was Rs 96 crore.

* The company's net profit did not match up with the consisting improvement in EBITDA as its finance costs shot up during the four-year period. Net profit between FY11 and FY14 rose from Rs 2.57 crore to Rs 4.1 crore. However, this again took flight in the current financial year and in the first half net profit was Rs 14.2 crore.

Proceeds from the fresh share issue

* Of Rs 400 crore, the company plans to use Rs 310 crore for repayment of debt.


* TPG Capital invested around Rs 190 crore in the company partly (Rs 20 crore) through shares acquired from the promoters. It currently holds almost 26 per cent stake.

* Actis had invested around Rs 220 crore in the company, again partly (Rs 50 crore) through stake purchase from the promoters. It currently holds 16.4 per cent stake in the firm.

(Edited by Joby Puthuparampil Johnson)

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