TPG buys stake in Indian ATM services provider
TPG will pay around INR150 crore ($33.6 million) for a 20% stake in AGS Transact Technologies, which provides ATM services to banks. Ravi Goyal, managing director of AGS, confirmed that the US private equity firm has purchased a “substantial stake,” the Economic Times reported. Two TPG members will also be appointed to the Indian firm’s board.
Sources familiar with the deal suggested that TPG might make the investment in tranches and later purchase an additional stake for about INR50 crore ($11.2 million). The transaction was made via TPG Growth, a fund that targets investments of $20-$75 million in mid-sized companies, with Avendus Capital advising.
India's ATM market has recently seen a degree of deregulation, with the Reserve Bank of India allowing banks to expand their networks directly or through third parties without prior approval. The number of ATMs in the country is expected to increase from 75,000 to 175,000 in the next few years, with outsourced ATMs rising from 20,000 to 90,000 over a 4-5 year period.
AGS is the market leader in ATM outsourcing, with a 30% share. It has installed more than 11,000 machines for banks including SBI, PNG, ICICI and HDFC. The company also has clients in the retail, petroleum and paint industries.
Recent activity in the segment includes New Enterprise Associates and Jacob Ballas buying Carlyle Group's holding in Financial Software & Systems, a Chennai-based ATM outsourcing firm.
It has been a busy period for TPG in India. The private equity firm this week purchased a 15% stake in Shriram Properties, the real estate arm of Indian financial services player Shriram Group, for INR450 crore ($100 million). TPG and Warburg Pincus have also reportedly been in talks over a potential $100 million investment in Vasan Healthcare.
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