Ascent Capital-backed Radiant Cash Management Services (RCMS) has filed its Draft Red Herring Prospectus (DRHP) with capital markets regulator SEBI to launch its initial public offering (IPO). Radiant Cash Management IPO will involve new shares worth up to INR60 crore while existing shareholders may sell up to 30.13 million equity shares through the Offer For Sale (OFS) route.
The OFS comprises issue of up to 10.13 million shares by Col. David Devasahayam and up to 20 million shares by private equity firm Ascent Capital Advisors India. In 2015, Ascent Capital acquired 37.2% holding in the company.
The proceeds from the issue worth INR20 crore will be used for funding working capital requirements, INR23.92 crore towards for funding of capital expenditure and for general corporate purpose. IIFL Securities Limited, Motilal Oswal Investment Advisors Limited and Yes Securities (India) Limited are the book running lead managers to Radiant Cash Management IPO.
RCMS IPO – Business background
Founded in 2005 by Col. David Devasahayam, Chennai-based RCMS is an integrated cash logistics player with leading presence in retail cash management (RCM) segment of the cash management services industry in India and one of the largest players in the RCM segment in terms of network locations or touchpoints served as of July 2021.
The upcoming IPO hopeful operates its business across five verticals, namely cash pick-up and delivery; network currency management (also known as cash burial in industry parlance); cash processing; cash vans /cash in transit and other value-added services.
The senior management team of the company is led by Col. David Devasahayam who has been the CMD of the company since its incorporation. Devasahayam is an ex-serviceman, served the Indian Army for over 24 years, a graduate of the Indian National Defence Academy and the Owner / President Management program at Harvard Business School.
RCMS has marquee clients including Axis Bank, Citibank, Deutsche Bank, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Standard Chartered Bank, State Bank of India, The Hongkong and Shanghai Banking Corporation (HSBC), and Yes Bank. Some of the end users of its services include Bajaj Finance, Equitas Small Finance Bank, Ecom Express Private, Delhivery and Hiveloop Logistics. In addition, it counts e-commerce companies, retail chains, NBFCs, insurance firms, ecommerce logistics players, railways and retail petroleum distribution outlets among its clients.
Radiant Cash Management IPO – Reach and network
As of 31 July 2021, Radiant had more than 42,420 touch points across 12,150 pin codes covering tier 2 and tier 3+ towns and cities across all states and union territories in India (other than Lakshadweep). For the quarter ended 30 June 2021, the company derived 76.2% revenue from tier 3+ towns while tier 1 and tier 2 towns and cities contributed 11.2% and 12.6% respectively. The company is managed by a team of ex-army senior management with 1,761 employees and 6,056 cash executives on contract.
According to DRHP, the Indian cash management services market revenue grew at a CAGR of more than 10% during the period between FY2010 and FY2021, growing from approximately INR10 billion to INR27.7 billion during this period.
Radiant Cash Management Services’ revenue from operations stood at INR221.67 crore during the year ended March 2021, while its profit after tax during the year stood at INR32.43 crore. As on 30 June 2021, the company’s net worth stood at INR1,091.4 crore and as of 31 July 2021, it had a fleet of 694 specially fabricated armoured vans through a combination of leased vehicles and on short-term contractual basis. RCMS boasts of high Return on Net Worth (RONW) of 25.5% and its peers include SIS Limited which listed in 2017.