Cash management company CMS Info Systems Ltd, which is fully owned by Baring Private Equity Asia, has filed a draft proposal with the Securities and Exchange Board of India (SEBI) for an initial public offering.
The IPO is entirely a secondary market sale of shares by Baring. The PE firm will sell 44.4 million shares, resulting in a 30% stake dilution on a post-issue basis.
The IPO value is estimated at Rs 750-800 crore ($115-121 million), according to two persons familiar with the matter. This will value the firm at Rs 2,666 crore ($405.6 million), according to VCCircle estimates.
CMS Info Systems will join listed peer Security and Intelligence Services (India) Ltd, which went public in August, on the bourses. The IPO of the CX Partners-backed SIS was subscribed seven times but the company made a weak stock market debut.
Baring PE acquired American private equity firm Blackstoneâs 57% stake in CMS in 2015 for which Baring shelled out $250 million, Reuters had reported.
Sion Investment Holdings Pte, Baringâs Singapore-based investment arm, would acquire 100% share capital of CMS by implementing two share purchase agreements â one between Blackstone FP Capital Partners (Mauritius) V Ltd, Sion and CMS; another between certain individuals and CMS Computers Ltd, Sion and CMS.
Sion would purchase 56.15% stake in CMS from Blackstone and another 38.69% shareholding from certain individuals and CMS Computers Ltd.
The remaining 5.16% stake â held by an employee through the employee stock ownership plan â would be acquired by Sion. The acquisition valued CMS Info around $448 million (Rs 2,800 crore then).
Hereâs a snapshot of CMS Infoâs proposed IPO.
The IPO is entirely a secondary market sale by Baring Private Equity Asia. The PE firm is looking to raise as much as Rs 800 crore ($121 million) from a 30% stake dilution in the cash management company.
Use of Proceeds:
The company will not receive any proceeds from the offer. It will go to the selling shareholder, Baring PE.
Kotak Mahindra Capital Co, Axis Capital and UBS Securities are the merchant bankers managing CMS Infoâs IPO.
Khaitan & Co is the legal counsel to the company.
Luthra & Luthra Law Offices and Ashurst LLP will represent the merchant bankers as their Indian and international legal counsel.
J. Sagar Associates will represent as the legal counsel to Baring PE.
CMS is Indiaâs largest cash management company based on number of ATM as well as retail pick-up points as of the year ended 31 March 2017. The company ranked fifth worldwide in ATM cash management based on the number of ATM points as on 31 December 2016.
Its currency throughput, the value of currency passed through its ATM and retail systems, amounted to Rs 729,000 crore as on March 2017.
The company operates in business verticals such as cash management services, managed services, and other allied services such as trading in card and card personalisation services.
The firmâs cash-in circulation grew at a compounded annual rate of 11.74% in five years from financial year 2011-12, which is attributed to the economic growth till about October 2016.
âDemonetisation caused cash in circulation to decrease to Rs 943,000 crore as on December 2016, but it has since recovered significantly, increasing to Rs 150,7000 crore as of June 2017.
Cash in circulation is currently expected to surpass pre-demonetisation levels and increase at a CAGR of 11.16% from FY2017-18 to 2020, with GDP expected to grow at a CAGR of 7.6% during the same period,â the company said in the DRHP.
The company reported consolidated net profit of Rs 78.66 crore for the financial year ended 31 March 2017 on consolidated revenues (from operations) of Rs 1,007.44 crore.
Its revenues stood at Rs 1,140.91 crore in FY2015-16 and Rs 1,339.15 crore in FY2014-15.
Its net profit stood at Rs 54.89 crore in FY2015-16 and Rs 72 crore in the year prior.