News

Indian IADs look to PE firms to bankroll expansion

September 7, 2012

Following the Reserve Bank of India's decision to allow white-label ATMs to operate in the country, IADs in India are scrambling to secure financing to expand their operations.

Currently Chennai-based payment services firm Financial Systems and Software Ltd. is in talks with private equity firms to raise up to Rs.220 crore ($3.97 billion) by selling a minority stake, said an article at Live Mint. This would be the fourth round of funding for the company.

So far, FSS has installed about 6,000 ATMs in India; in a recent bidding round for 60,000 new installations for public sector banks, the company won a contract to set up and operate another 4,000 ATMs. The company will also take on $80 million in debt to meet its funding requirements, the Live Mint article said.

Meanwhile, Mumbai-based IAD, Accura Infotech Pvt. Ltd., is in talks with PE investors to raise Rs. 125-200 crore ($22.6–$36.2 million) by selling a minority stake.

Chennai-based IAD Prizm Payments Services Pvt. Ltd also is in talks with investors. And last week, AGS Transact Technologies Ltd., a Mumbai-based IAD, raised $40 million from PE investor Actis.

"With RBI opening doors to non-banking entities, the ATM business has to grow," Sunil Goyal, managing director and chief executive of Mumbai-based investment bank Ladderup Corporate Advisory Pvt. Ltd., told Live Mint. "Only regulatory changes, if any in future, can impact this. These are IPO-able businesses. We will see a lot of consolidation in this space as we move forward because size would matter."

For more on this topic, visit the distributor/ISO/IAD research center.