CX Partners finalizes $22m investment in Transaction Solutions unit
CX Partners has finalized its acquisition of a 75% stake in the Indian ATM unit of Australia's Transaction Solutions International (TSI). The private equity firm has agreed to pay INR1.2 billion($22.13 million) for TSI India.
According to a filing, the board of ASX-listed TSI approved the deal earlier this week. The company shareholders will discuss the deal at a meeting in mid-May.
CX Partners will make the investment in two tranches. The first tranche of INR805 million will be made through the of purchase of existing TSI Shares plus additional purchase of INR125 million worth of new shares. The second INR412 million tranche will be made entirely through the purchase of new shares. The investment, which values TSI india at around $29 million, is being made through CX Partners' $515 million maiden fund, one of the largest India-focused PE vehicles targeting growth opportunities.
TSI owns, manages and operates financial hardware and systems, in return for a fee per transaction.Investors have indicated to TSI that they intend to waive a condition that requires TSI India win contracts to supply 500 new ATMs at an agreed IRR before March 31.
TSI India has been operational since 2006 and operates more than 1000 ATMS. In March the company signed a nine-year agreement with Tamilnad Mercantile Bank (TMB) to deploy and manage an additional 200 ATMs, with the ability to extend that to as many as 400 machines.
The company also has contracts for automation of bill payments processes. Its clients include HDFC Bank, Punjab National Bank, Tamil Nadu Mercantile Bank, SBI Cards and IndusInd Bank, among others.
The market opportunity for ATMs in India is considerable - the ratio of ATMs to people is 1:15,000, compared with 1:700 in the US. To address the mismatch, a consortium of state-run Indian banks has opened the business to independent contractors, with a view to outsourcing 63,000 ATMs to various service providers.
Industry estimates predict the number of ATMs in India will increase from approximately 95,000 in 2012 to at least 200,000 by 2017.
Recent private equity deals in this space include Actis' $40 million investment for an undisclosed stake in AGS Transact Technologies.
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