Private equity firm CX Partners has finalised the deal to buy 75 per cent stake in the India ATM business of Australia’s Transaction Solutions International Ltd for $22 million (Rs 121.7 crore). According to the ASX-listed firm, its board has agreed to the deal and it is now subject to shareholders’ approval.
The shareholders’ meeting for stake sale in TSI India is expected to be held in mid-May this year.
As per the deal announced in November 2012, CX Partners is expected to invest the entire $22 million in several tranches, with the PE firm investing Rs 80.5 crore initially. The deal, which would value TSI India at Rs 160 crore or $29 million, was dependent on the condition that TSI India would get a contract to supply 500 new ATMs at an agreed internal rate of return before March 31, 2013.
Last month, TSI India signed the fourth 9-year agreement with Tamilnad Mercantile Bank to deploy, manage and operate additional 200 ATMs, with the ability for up to 400 ATMs. The company has more than 1,000 ATMs fully operational and generating revenues.
Besides ATMs, Transaction Solutions also has contracts for automation of bill payment processes. Its clients include HDFC Bank, Punjab National Bank, Tamil Nadu Mercantile Bank, SBI Cards and IndusInd Bank, among others.
Market opportunity for ATMs is considered to be large. In the US, the ratio of ATMs to population is 1:700 while in India it is 1:15,000.
According to industry estimates, the number of ATMs in India will increase from approximately 95,000 in 2012 to at least 200,000 in 2017. Recently, emerging market-focused private equity major Actis has also invested $40 million for an undisclosed stake in AGS Transact Technologies Ltd, which is operating in the same space.
HSA Advocates was the legal adviser to Transaction Solutions International (India) Private Limited as well as its international promoter for the transaction.
(Edited by Sanghamitra Mandal)