AGS Transact Technologies secures SEBI clearance for INR1,350 crore IPO


AGS Transact TechnologiesMumbai-based payment solutions provider AGS Transact Technologies has received market regulator Securities and Exchange Board of India (SEBI) approval to launch its initial public offering (IPO). In its draft red herring prospectus (DRHP) filed with the regulator, the company said it plans to raise up to INR1,350 crore (USD211.6 million) through the public offer.

The regulator issued its final observation on the draft offer on 28 May. The final observation amounts to a green signal by the regulator. The company filed its draft offer to the regulator on 24 March 2015 through Axis Capital.

The issue would be a mix of fresh issue of shares and offer for sale (OFS) by existing shareholders. AGS Transact Technologies counts private equity firm TPG Capital and Actis (through Oriole Ltd) among its investors. Up to INR400 crore would go to the company while TPG Capital, Oriole Ltd and company promoter Ravi Goyal would raise up to INR950 crore through sale of existing shares. Out of the existing shareholders, TPG Capital plans to sell shares worth up to INR551 crore while Oriole Ltd plans to offload shares aggregating up to INR349 crore. Ravi Goyal is poised to net INR50 crore through the offer for sale.

Ravi Goyal currently holds 55.2% equity stake in the company while TPG Capital and Oriole Ltd hold 25.96% and 16.44% respectively. Both investors have representatives on the board of directors.  Axis Capital, Citigroup Global Markets India, HDFC Bank, ICICI Securities and Kotak Mahindra Capital Company will be the book running lead managers of the issue.

The company may allocate shares worth up to INR200 crore in a pre-IPO placement. The IPO size would be reduced by that extent if the company indeed places shares before the public issue.

Use of funds

Out of the INR400 crore it hopes to garner, nearly INR310 crore will be used to repay loans which currently stand at INR436 crore. The rest will be used towards general corporate purposes.

Company background

Established in 2002 as AGS Infotech Pvt Ltd, the company had tried launching its IPO earlier in 2010. However, it did not go ahead with the plan. Catering to clients in the banking, retail and petroleum sectors; the company counts ICICI Bank Limited, Axis Bank Limited, HDFC Bank Limited and State Bank of India among its clients in the banking industry. In other industries, it caters to Bharti Retail Limited, DLF Brands Limited, Future Retail Limited, Indian Oil Corporation Limited, Hindustan Petroleum Corporation, Asian Paints Limited, Berger Paints India Limited.

As of December 2014, AGS Transact Technologies had installed, maintained or managed a network of 41,569 ATMs, provided cash management services to more than 10,000 ATMs through its Securevalue India Limited (SVIL) subsidiary.

The company’s top line growth has been very impressive, growing almost four times over the last four years. Except a blip in FY 2009/10, it has been a sturdy upward journey on key financial metrics. As can be seen in the table below, the company is on its way to post yet another record performance in FY 2014/15.

AGS Transact Technologies’ financial performance (in INR million)

  Six months FY 2014/15 FY 2013/14 FY 2012/13 FY 2011/12 FY 2010/11
Total Revenues 5,680.85 9,512.35 6,382.83 5,132.41 2,445.72
EBITDA 917.75 1403.02 704.47 626.2 263.1
Profit After Tax 161.07 146.95 82.86 106.82 53.79


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