Private equity firm CX Partners is close to finalising the definitive agreements to buy 75 per cent in the India ATM business of Australia’s Transaction Solutions International Ltd. CX Partners is expected to pay $22 million (Rs 121.7 crore) for the stake in the India arm of the Australia Stock Exchange-listed firm.
“Discussions have progressed significantly since the completion of the term sheet offer between CX Partners and the TSI Group. Definitive Agreements have been discussed in depth and are being finalised,” Transaction Solutions International said in a filing.
Under the deal announced in November, CX Partners is expected to invest the entire $22 million in several tranches, with the PE firm investing Rs 80.5 crore initially. The deal is subject to shareholders’ approval.
“TSI is completing the due diligence on its tax and legal position for the multiple jurisdictions within its corporate structure, which is critical to its final position. However, this increases the time for deal completion due to the reliance on third parties reverting to TSI,” added the statement which has been filed today.
The deal, which would value Transaction Solutions International Pvt Ltd at Rs 160 crore or $29 million, is dependent on the condition that Transaction Solutions gets a contract to supply 500 new ATMs at an agreed internal rate of return before March 31, 2013.
According to Transaction Solutions, it has already signed the fourth 9-year agreement with Tamilnad Mercantile Bank to deploy, manage and operate additional 200 ATMs, with the ability for up to 400 ATMs. The company now has more than 1,000 ATMs fully operational and generating revenues.
Besides ATMs, Transaction Solutions also has contracts for automation of bill payments processes. Its clients include HDFC Bank, Punjab National Bank, Tamil Nadu Mercantile Bank, SBI Cards and IndusInd Bank, among others.
Market opportunity for ATMs is considered to be large. In the US, the ratio of ATMs to population is 1:700, while in India it is 1:15,000.
According to industry estimates, the number of ATMs in India will increase from approximately 95,000 in 2012 to at least 200,000 in 2017. Recently, emerging markets private equity major Actis has also invested $40 million for an undisclosed stake in AGS Transact Technologies Ltd, which is operating in the same space.
(Edited by Sanghamitra Mandal)