CX Partners is near to closing its acquisition of a 75% stake in the Indian ATM unit of Australia's Transaction Solutions International (TSI) for $22 million. According to a filing made by the Australian Securities Exchange-listed firm, discussions between to two parties had "progressed significantly" and a definitive agreement is being finalized. CX Partners is expected to invest the entire $22 million in several tranches, committing around $14.6 million initially.
The investment is being made through CX Partners' $515 million maiden fund, one of the largest India-focused PE vehicles targeting growth opportunities. The deal, which values TSI India at around $29 million, is dependent on the condition that TSI gets a contract to supply 500 new ATMs at an agreed IRR before March 31. The company has already signed the fourth 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.
TSI India 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 hasopened 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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