AGS promoters to buy back 42% stake held by PE investors TPG, Actis

Mumbai: AGS Transact Technologies Ltd’s promoters will buy back shares from private equity investors TPG Growth and Actis as the payments solution provider’s initial public offering (IPO) plans continue to be on the backburner, two people aware of the development said.

AGS promoters will buy back a 42% stake in the company from TPG Growth and Actis in a deal worth Rs650-850 crore, one of the two people cited above said on condition of anonymity.

The promoters are raising debt from other financial institutions for the buyback.

“Promoters are in discussions with a few financial institutions to raise debt and provide an exit to the investors, who have been holding the stake for more than six years,” said the second of the two people, also on condition of anonymity.

At present, promoter Ravi Goyal owns 55.2% in AGS Transact, TPG holds 26% and Actis arm Oriole Ltd owns 16.44%. TPG and Actis made their first round of investments in AGS in 2011 and 2012 respectively.

Both investors had made additional investments in February 2015 in a pre-IPO round.

In March 2015, AGS Transact filed papers with market regulator Securities and Exchange Board of India (Sebi) to raise up to Rs1,350 crore through an IPO, which did not materialise.

Previously in 2010 too, the company had filed documents with Sebi.

Spokespersons for Actis and TPG Growth declined to comment. An email sent to AGS did not elicit any response until press time.

AGS, with over 60,000 ATMs, leads the industry with a 25% market share of the total installed base of about 2,07,000 ATMs (according to December 2017 RBI data).

Among white label ATMs—which are not set up by banks—AGS Transact competes with Euronet, FSS and Hitachi Payment Services.

Founded by entrepreneur Ravi Goyal in 2002, AGS Transact Technologies operates across 700 cities and towns across India, with over 160,000 customer touch points, according to the company’s website.

Its ATM deployment and managed and outsourcing division has a client base of over 80 banks.

AGS is engaged with cash management services through its wholly-owned subsidiary, Securevalue India Ltd (SVIL).

“At times, the promoters and the PE funds may not agree on the timing, the process or potential pricing for an exit event. In such cases, buy back by the promoter group is possibly the best way to avoid any acrimony,” said Sanjeev Krishan, transaction services and private equity leader at PwC India.

Also, there is a fair bit of promoter funding options available to enable them to do so, Krishan added.

In 2013, venture capital firm Sequoia Capital exited its investment in payment solutions firm Prizm Payment Services Pvt Ltd when Japanese conglomerate Hitachi Ltd acquired the Chennai-based Prizm in a deal worth Rs1,500 crore.

ICICI Venture, the alternative asset management arm of ICICI Bank Ltd, India’s largest private sector bank, holds a minority stake in Bengaluru-based payment gateway services provider BTI Payments Pvt. Ltd.

CMS Info Systems Ltd, the largest cash management company in India, has been looking to float an IPO and filed a draft red herring prospectus (DRHP) with Sebi in September last year.

In 2015, Baring Private Equity Asia acquired 100% stake in CMS Info Systems for around Rs2,000 crore.livemint