Mumbai: Baring Private Equity Asia-owned cash management company CMS Info Systems Ltd has started work on an initial public offering (IPO) aiming to raise around Rs700-800 crore, two people aware of the development said.
CMS, the largest cash management company in India, manages the entire flow and management of money for around 100,000 ATMs and retail points, including cash processing, cash-in-transit, cards, ATM network management and retail management.
“They recently appointed investment banks Axis Capital, Kotak Mahindra Capital and UBS to manage the share sale. They are looking at raising around Rs700-800 crore," said one of the two persons cited above, requesting anonymity as he is not authorized to speak to reporters.
The IPO could be a mix of primary and secondary share sale, but these are early days and details are yet to be firmed up, he added.
“CMS does not comment on market rumors and speculation. We continue to stay focused on growing the business and further strengthening our market leadership through customer centric service and technology innovation," a spokesperson for CMS said in an emailed response to a query. Emails sent to Axis Capital, Kotak Mahindra Capital and UBS did not elicit any response.
CMS Info Systems was formed in 2009 following an investment by the Blackstone Group to acquire majority stake in certain key businesses of CMS Computers from the Grover family.
In 2011, CMS acquired Securitrans India Pvt. Ltd, the second largest cash management company in India, thus consolidating its position as the leading cash management services company in India.
In 2015, Baring acquired 100% stake in CMS Info Systems for around Rs2,000 crore, according to media reports. After cashing out, Rajiv Kaul and the management team decided to reinvest in the company and continue to lead it, The Economic Times reported September 2015. The management team lead by Kaul, held a 10% stake in the company at the time of Baring’s acquisition.
According to the company’s website, CMS manages 57,000 ATMs across the country, handles over 50% of ATM cash circulation and 48% of retail cash collections in the country. The company operates over 150 vaults and over 4,000 cash vans.
In the banking industry its clients include the likes of State Bank of India, Axis Bank Ltd, ICICI Bank Ltd, HDFC Bank Ltd.
CMS is not the first company in the cash management business that has considered going public recently.
Last year, Security and Intelligence Services (India) Ltd, which has a presence in cash management business through its joint venture with Prosegur of Spain, filed for an almost Rs1,000 crore initial share sale. The company is backed by private equity firm CX Partners.
As of August 2016, the company’s cash management business provided services in cities and towns across India, including major cities such as Delhi, Chennai, Mumbai, Hyderabad and Kolkata, with a network of 76 branches, operating more than 2,296 cash vans, across 2,511 cash routes. The company has also set up a secure cash processing unit at Delhi.
The IPO is expected to hit the market sometime this year.
AGS Transact Technologies Ltd, another ATM and cash management services company, filed for an IPO in 2015. The company is backed by private equity firms TPG Growth and Actis.
AGS provides cash management services to more than 10,000 ATMs through its subsidiary Securevalue India Ltd and, as of December 2014, had installed, maintained or managed a network of 41,569 ATMs, according to the draft prospectus filed by the company. However, AGS eventually did not go ahead with its IPO.
So far this year, 13 companies have raised over Rs11,700 crore through the IPO route.
In 2015 and 2016, 47 companies raised a total of Rs40,177 crore through IPOs, data from Prime Database shows. More than two-thirds of these companies were backed by private equity firms.