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Salient features of the IPO:

• AGS Transact Technologies Ltd. (AGS), an integrated omni-channel payment solutions provider is coming up with an IPO to raise Rs. 680cr, which opens on 19th Jan. and closes on 21st Jan. 2022. The price band is Rs. 166 - 175 per share.

• The issue only has OFS portion, thus the company will not receive any proceeds from the IPO issue.

• AGS and the promoter selling shareholder entered into an agreement, pursuant to which the promoter selling shareholder from the OFS net proceeds will purchase the compulsorily convertible preference shares (of promoter corporate) held by AGS, which in-turn will utilize to redeem the issued outstanding NCDs. Indirectly, the funds will be received by the company, which will be utilized to reduce the debt burden.

Key competitive strengths:

Omni-channel integrated payment and cash solutions provider

• Customer driven portfolio with strong capabilities to develop customized solutions in-house

• Diversified product portfolio, customer base and revenue streams leading to cross-selling opportunities

• Long-standing relationships with technology providers and customers

• Dedicated in-house infrastructure and technological capabilities

• Experienced Board of Directors and senior management

Risk and concerns

• Unfavorable government policies and regulations

• Unexpected decline in cash in circulation in the economy

• Decline in the financial position of the banks, thereby affecting the expansion of the ATM network and outsourcing activities

• Sustained cost inflation

• Inability to maintain the profitability

• Competition

Below are the key highlights of the company:

• India being a strong informal economy with low ATM penetrations and cash’s role of a store-of-value, cash payment transactions, and consequently, the demand for ATM and Cash Recycler Machine (CRM) and related services, is expected to continue to grow. At the same time, with the launch of new & innovative payment products, increasing smartphone adoption and a strong push from the government & regulators towards the adoption of cashless transactions, there will be continued higher demand of digital payments services in India.

• As of 31st Mar. 2021, AGS was one of the largest integrated omnichannel payment solutions providers in India in terms of providing digital & cash based solutions to banks and corporate clients. The company provides customized products and services comprising of ATM & CRM outsourcing, cash management and digital payment solutions including merchant solutions, transaction processing services and mobile wallets.

• In terms of revenue from ATM managed services under the outsourcing model and revenue from cash management & number of ATMs replenished, AGS was the second largest company in India in FY21. The company has presence in Asian countries like Sri Lanka, Singapore, Cambodia, Philippines and Indonesia, where it provides automation and payment solutions to banks & financial institutions.

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