Ebix Inc. and its India-born chairman and CEO, Robin Raina, grabbed the headlines in India when the Nasdaq-listed company acquired digital payments firm ItzCash in May. Since then, the company that sells on-demand software and e-commerce services to financial sector clients has struck five more deals in India, including the acquisition of Via.com, to establish a presence in remittances, travel booking and business process outsourcing.
Raina, who joined Ebix 20 years ago and rose through the ranks, shares Ebix’s plans for India with VCCircle. Excerpts:
The five acquisitions you have done were mostly consumer-facing businesses while the joint venture you announced last week is a backend play. What is the logic behind entering BPO and IT services?
Well, this was expected. We have always talked about how we want to do end-to-end stuff. Be it the US, Brazil, Australia or any other market, we operate end-to-end processes. We operate business-to-consumer (B2C) and we run business-to-business (B2B) and we connect all the dots. So, we take a transaction from a consumer all the way to the backend provider; whether it is a bank or insurance company or anybody.
We do everything from customer relationship management systems to front-end management systems to policy administration systems. You could also see us getting into providing systems for bank, systems for financial companies. We like to do that because we think if we provide the entire value chain from one end to the other the business stickiness is much more.
If you can move data and conduct processes with efficiency, you are able to provide efficiency to the backend system provider, to the in-between entities. You bring efficiency to the exchange, you also bring efficiency in the front-end side of the business and ultimately generate better value for everybody. It leads to better pricing for the consumers. That has been our experience and so this is logical.
After the acquisition of ItzCash, you had said that you had earmarked $100 million more for acquisitions. Have you exhausted that $100 million?
We actually said $100 million sometime back and then we said we have earmarked $200 million. Don’t read much into these numbers because this $200 million can become $300 million if we need to do that. It is all a function of scaling up based on what we think is good in India.
After ItzCash, we paid around $75 million for Via, and then we bought three remittance companies wherein I think we spent about $60 million, that by itself is $130 million. Then you add the new one, we are getting close to that $200 million. That is an artificial limit. We will increase it if need be.
So, you are not done with inorganic expansion?
No, we are not done. The pace might have been very brisk. When we do inorganic expansion, we want to ensure organic growth [in the companies acquired]. That is what we have been able to accomplish.
We would like to see Ebix India to generate at least $200 million revenue by 2018. We are organically growing fast. We grew Ebix Cash business more than 30% sequentially quarter over quarter. I would say that I can see India operations being $500 million in three years or so. There is no guarantee [we will achieve it], but we are aspiring for [that target].
What is the game plan behind half a dozen deals in such a short period?
The Indian market is in the virgin territory. Nobody has done yet what we are trying to do. We are trying to build an airport for finance. An airport is an infrastructure; you need to basically own all the different pieces. When we connect everything with common management, centralised HR, finance and marketing, we bring efficiency to the system. Not only internally but also externally from consumer to the backend.
If the consumer in India wants 45 different services—be it life insurance, property insurance, gift card, remit money locally or abroad, buy visitors’ insurance, buy gold, pay utility bill, hotel or airline booking–45 different companies provide these services. That is not good for the consumer.
Our philosophy is that we must have all the different pieces of the puzzle. If the consumer wants to speak to us over the phone we must make that available. We also want to create the largest reach in the country.
Right now, we have 224,000 outlets. Through our deal with BSE, we are going to sell insurance through their 300,000 terminals and our outlets. We want to connect all the dots, which makes life easy for the customer.
Your end-to-end fintech play may put you in direct competition with some Indian companies. For instance, Paytm too wants to expand into different avenues of financial services.
Not really. I don’t want to specifically talk about companies but having an e-wallet is a completely different thing. They are not doing travel, remittance and gift card. We are doing all those things. They might enter subsequently. In travel, we do not just facilitate booking, but we provide travel exchange also.
Which other segments in financial services are you entering?
You could see us enter lending; lending to consumers and then lending to MSMEs (micro, small and medium enterprises) and then owning lending exchanges. You could see us getting into B2B exchanges for insurance and mutual funds.
Who will control the BPO joint venture with the Kanorias? What are the broad contours of the deal?
There are multiples things to think through in terms of who has financial consolidation rights and who has operational rights and so on. It is early to comment on that, but we have all that sorted out. We are going to be deeply involved.
What are your thoughts on the evolution of India’s digital economy?
We are playing an important part in the digital economy by trying to create an end-to-end system in a digital manner. Sometimes people confuse going digital with e-wallets. It is just another tool. They are giving cash-backs and that is an unsustainable strategy. Companies have to discover a better value chain than thinking of gaining market share by giving money. I feel that digitisation has to mean a lot more than that.
E-wallets other than Paytm have faced challenge in scaling and fundraising. Do we see you making strategic moves there?
You can see us playing a larger role there. At the same time, we are never going to play the strategy of giving money away. If we buy an e-wallet company, it will be because we will interphase it with 20 other things at the back so that there will be greater value chain. We are convinced that just providing an e-wallet is not a good strategy. You must have all the different pieces. By just hooking into the government’s UPI (Unified Payments Interface) and getting in front of the customers you become just a marketing arm.
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