VOR (ASX) Ann: TSN &amp; Novatti Sign Agreement to Target India Payments Market

Originally posted by TonyIndo ↑

Cheers guys.

The biggest takeaway for me from the TSN/NOV tie up announcement is that both parties will be potentially targeting an existing established business line (ATMs), with 500m plus customers that the company is currently serving. It will however cost them. Close to $50m bucks worth to acquire the remaining 75% balance of TSI. The success of those big m-wallet players hasn't come without cost either. They've spent a significant amount of big dollars on customer acquisition and development. The potential upselling TSN could do just across this one biz line that could potentially fall within multiple sub-categories across ATMs, ie bill pay, loyalty and rewards, remittances etc...would be phenomenal. Why? Because they would then have the clients and customers and there would be minimal spend post potential transaction. Let's see how things progress from here.

Tony

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Very true Tony ... the value of the channel to market that TSI has already built is enormous if you have additional products to sell through those channels ... and that is what the relationship with NOV has created ... products to distribute via our existing channels to market.
The key now is tying up the distribution channel through acquiring 100% of TSI. Given all the commentary coming out of India regarding cash shortages I wonder if there will be another delay around the deal. Personally I hope not BUT there maybe good reasons to delay such as:
1. To negotiate a lower purchase price
2. To ensure that the transaction levels have stabilised at a level that provides good sustainable future income
3. To allow time to secure some deals using the NOV platform and thus provide greater reassurance to all investors of the value of the acquisition
4. To allow time to secure some deals using the NOV platform and thus develop relationships outside of TSI which effectively devalues the value of TSI and hence the purchase price we are willing to pay
5. To allow a 3rd party to finalise an offer for TSI which is far in excess of anything we have previously considered, thus providing a large return to shareholders (especially if it coincides with 4)!

Regardless of that, the NOV deal is certainly great news Tony, and having it in TSN prevents any future issues around non-100% ownership

MartyW