IPO Alert: Payment solutions provider AGS Transact files papers to go public

As of March 2021, there were 213,575 ATMs installed in India, sharply higher than 199,099 in 2016. The number of ATMs operating in the country’s ATMs market increased from 212,061 in 2016 to 238,588 as of March 2021.

 AGS Transact Technologies Ltd. recently filed draft papers for its initial public. The existing shareholders of the company plan to sell shares worth ₹8 billion. The selling shareholders shall be entitled to the net proceeds from the offering, which will be credited/transferred to a separate bank account. The company will not directly receive any proceeds.

Company Profile

AGS Transact is an integrated omnichannel payment solutions provider in India, offering digital and cash-based solutions to banks and corporate clients.

The company provides customized products and services comprising ATM and CRM outsourcing, cash management, and digital payment solutions including merchant solutions, transaction processing services, and mobile wallets.

As of March 2021, the Mumbai-based player was the second-largest company in India in terms of revenue from ATM-managed services under the outsourcing model, revenue from cash management, and the number of ATMs replenished.

Key Numbers

The company reported revenue from operations of ₹17.5 billion, ₹18 billion, and ₹18.05 billion respectively for the financial years 2021, 2020, and 2019. Whereas the company had a profit of ₹547.92 million, ₹830.14 million, and ₹661.94 million respectively in 2021,2020, and 2019.

AGS Transact derives a significant portion of its revenues from customers in the banking sector. In the year 2021, revenue from the banking sector alone was around 68% of the total.

The government’s demonetization drive led to a currency shortage in 2016. Consequently, there was a sharp decline in ATM transactions, which caused a reduction in the usage of ATMs. Such incidents can have a negative impact on the company’s business. It was a similar scenario after movement restrictions were imposed following the coronavirus outbreak – a reduction in cash transactions left many ATMs idling.