AGS Transact Technologies, online payments space at fuel stations and among the largest players in ATM and cash management services, will use Rs 600 crore of the Rs 800-crore-fully offer-for-sale issue to retire debt.
Ravi Goyal, chairman and managing director of AGS, told PTI that the company has Rs 1,100 crore mostly long term debt, and post-IPO, it will come down to around Rs 500 crore as they will pay back Rs 600 crore and the remaining Rs 200 crore will come to the company.
Currently, Goyal and his family own 95 per cent of the city-based firm, and the rest is with employees through Esops.
The merchant bankers are yet to arrive at a valuation, which will decide how much the promoters will dilute their stake, he said.
Goyal said debt rose after he bought out private equity firms Actis and TPG in 2018, which had invested Rs 410 crore in 2012 for 42 per cent equity. In 2018, they were bought out for Rs 450 crore.
The Rs 800-crore IPO consists of Goyal selling 8 crore shares worth Rs 792 crore through OFS and family members -- VC Gupte, Shailesh Shetty, Rakesh Kumar, Nikhil Patiyat and Rajesh Harshedrai Shah -- selling for Rs 8 crore.
That apart a few of the 500 employees out of the 2,500, who have got the Esops will also be selling, he said.
AGS started providing banking automation solutions in 2004 by deploying ATMs of Diebold-Nixdorf, and from 2009, it began to offer ATM outsourcing and managed services again with Diebold-Nixdorf for banking and retail products.
From 2011, it began to offer transaction switching services and cash management services in 2012. And in 2014, it began to offer digital payment solutions.
For the fiscals 2021, 2020 and 2019, its income stood at Rs 1,797 crore, Rs 1,833 crore and Rs 1,823 crore, from which it earned a pre-tax profit of Rs 82.4 crore, Rs 119.5 crore and Rs 78.9 crore on a gross margin of 26.5, 27 and 24.3 per cent, respectively.
On the growth focus, Goyal said revenue will continue to come from digital businesses, ATM and cash management services. Currently, as much as 87.3 per cent of the revenue is recurring, of which 12 per cent come from digital.
He said ATM and cash management services are the cash cows in terms of the topline and bottom-line. And among the two, ATM gives the highest net margin, especially after the RBI allowed Rs 17 per ATM transaction of which Rs 14 comes to AGS per traction now.
AGS is the largest integrated omnichannel payment solutions provider in terms of providing digital and cash-based solutions to banks and corporate clients.
Its services include customised products and services comprising ATM and CRM outsourcing, cash management and digital payment solutions, including merchant solutions, transaction processing services and mobile wallets.
In FY21, it was the largest deployer of payment machines at fuel pumps at over 16,000 outlets with 28,986 terminals, and the second largest in terms of revenue from ATM managed services under the outsourcing model and revenue from cash management.
Currently, the payment solutions vertical fetches 76.8 per cent of revenue, banking automation solutions 9.1 per cent and other automation solutions get the remaining 14.1 per cent of the topline, Goyal said.
(With PTI inputs)