IPO Alert: India1 Payments files drafts papers for a public issue

India had a total of ₹27.6 trillion of cash circulation at the end of fiscal 2021, indicating a strong presence of cash and preference for its usage amongst the people despite growth in retail digital payments transactions.

Last year, the total number of ATMs deployed in the country was 238,588. After growing at a strong pace between 2012 and 2016, the growth in the number of installed ATMs slowed down significantly to 2.4% in the past five years.

India1 Payments Ltd recently filed draft papers with the Securities and Exchange Board of India to raise funds through an initial public offering.

The IPO comprises a fresh issue of equity shares worth ₹1.5 billion, and an offer for sale of up to 10.31 million shares by existing shareholders and promoters. As per the filing, the company may consider a pre-IPO placement to raise up to ₹300 million. From the net proceeds, around ₹632.50 million will be utilized for full or partial repayment/pre-payment of certain borrowings availed by the company.

Further, India1 Payments plans to deploy ₹492.74 million from the net proceeds towards capital expenditure requirements, such as setting up of 1,000 ATMs in semi-urban and rural regions in 2022 and 2023. The remainder of the amount will be used for general corporate purposes.

ATM Operator

India1 Payments Ltd is one of the largest independent non-bank ATM operators in India, based on transactions and installed base in fiscal 2021. As of June 30, 2021, the company had a network of 8,520 ATMs across 14 states and union territories in the county, branded as ‘india1ATM’. The company has a license to operate ATMs under RBI guidelines.

The Bangalore-based company generates revenue on a per-transaction basis from an interchange fee paid by customers’ banks for processing ATM transactions, rather than the customer itself.

Key Numbers

In fiscal 2021 and the June quarter, gross transaction value of cash transactions from the company’s ATMs was ₹439.75 billion and ₹136.39 billion, respectively. Full-year revenue from operations was ₹3.17 billion, against ₹2.56 billion a year ago. Net profit was ₹33.4 million, versus a loss of ₹60.1 million last year.

The company’s operations were severely impacted by the pandemic as ATM transactions were hit by the slowdown in economic activity and decrease in customer footfall. ATM transactions decreased by approximately 12.30% from March 2020 to May 2020.

Operations of the company and its third-party service providers might continue to be disrupted by the social distancing, work from home, and quarantine measures. Meanwhile, there is no clarity on the long-term impact of the pandemic on the ATM business.