Security services firm SIS files for IPO; CX Partners to part-exit

India’s second largest private security services provider Security & Intelligence Services (India) Ltd (SIS) has filed its draft red herring prospectus with the securities market regulator SEBI for its initial public offering (IPO).

The proposed issue has a mix of fresh issue of shares besides an offer for sale by private equity investor CX Partners and SIS promoters.

This could pave the way for first such security service firms to go public in the country. SIS also has a facility management service business, a fast growing but fragmented business.

Diversified business services firm that also does facility management, Quess Corp Ltd, went public in July. Fairfax-controlled Quess saw massive investor interest with 144x bids for shares, making it the most oversubscribed issue in over eight years.

SIS issue would be keenly watched by some other private equity backed peers such as Tops Security Ltd.

Here’s a snapshot of the IPO

Issue: Fresh issue to raise Rs 362.25 crore besides offer for sale by CX Partners (3.5 million shares) besides promoters and others.

Bankers: Axis Capital, ICICI Securities, IIFL, Kotak Mahindra Capital, SBI Capital, Yes Securities and IDBI Capital are managing the issue.

Use of proceeds

The company intends to use the money it would get from the fresh issue of shares to retire debt (Rs 200 crore) and meeting working capital needs (Rs 60 crore). The rest of the money is to be used to general corporate purposes.


The firm claims to be the second largest security services provider in India, in terms of revenue, as of March 31, 2015, and the fastest growing security services provider in India, based on revenues for Fiscal Years 2010 to 2014, citing Frost & Sullivan data. Security services is a highly fragmented industry with national players accounting for just 20% of the total business. It is projected to grow at the rate of 20% between 2015 and 2020 to reach a size of around Rs 9,70,400 crore.

It also runs operations in Australia where it claims to be the largest security services provider in Australia, jointly with a competitor, in terms of revenues, as of March 31, 2015.

It says it is second largest cash logistics service provider in India, in terms of market share by revenue, number of employees, ATMs served and cash vans utilised, as of March 31, 2015. This business in India includes services such as cash in transit including transportation of bank notes and other valuables, doorstep banking as well as cash processing, ATM related services including ATM replenishment, first line maintenance and safekeeping, and vault related services for bullion and cash. SIS also offers electronic security services and home alarm monitoring and response services.

In the facility management services space it is into cleaning, janitorial services, disaster restoration and clean-up of damage, as well as facility operation and management such as deployment of receptionists, lift operators, electricians and plumbers, and also pest and termite control.  As first reported by VCCircle, last month SIS acquired 78.72% of Dusters Total Solutions Services Private Limited (Dusters), with the agreement to buy out the remaining stake over the next three years.

Dusters is the fourth largest facility management services provider in India, in terms of revenues, as of March 31, 2015, according to Frost & Sullivan.

SIS picked 78.72% stake for Rs 117 crore, valuing Dusters at Rs 149 crore.

As of August 1, 2016, subsequent to its acquisition of Dusters, SIS has a network consisting of 229 branches in 118 cities and towns in India, which cover 605 districts. It employed 133,551 personnel and rendered security and facility management services at 10,224 customer premises across India.

In Australia, it operates in each of the eight states and employed 5,386 personnel servicing 223 customers, as of 1 August, 2016. It had built its exposure to Australia as it acquired Chubb Security in 2008.


Its revenues rose 8% to Rs 3,836.2 crore while net profit rose 21.5% to Rs 76.2 crore for the year ended 31 March 2016, over the previous year. Bulk of the revenues came from security services. The addition of Dusters would add over Rs 300 crore to its topline. The firm has grown its revenue through the years but its earnings growth has been patchy. Its net profit in FY16 was still less than what it recorded in FY12. SIS had reported decline in net profit in FY13 and FY15 over the corresponding year-ago periods.


Private equity firm CX Partners had invested in the firm three years ago. Its investment was through a mix of stake purchase from DE Shaw that exited SIS, besides fresh investment into the firm. It holds over 15% stake currently and is looking to sell around one-third of its holding in the firm as part of the offer for sale.

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