TSI bags ₹200 cr via credit fund | Mint
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Business News/ Companies / News/  TSI bags 200 cr via credit fund
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TSI bags ₹200 cr via credit fund

The capital, raised against convertible securities, will help with TSI’s business expansion initiatives and accelerate its ATM deployment and other payment processing plans

Kalpesh Kikani, CEO, Piramal Alternatives.Premium
Kalpesh Kikani, CEO, Piramal Alternatives.

MUMBAI : Piramal Alternatives and CDPQ-backed performing credit fund have agreed to extend a 200 crore sum to ATM (automated teller machines) operator Transaction Solutions International (India) Pvt Ltd (TSI) in a structured credit transaction, a top executive said.

The capital, raised against convertible securities, will help with TSI’s business expansion initiatives and accelerate its ATM deployment and other payment processing plans, the firm said. “With TSI, we had the opportunity to participate in a professionally led business within the high growth consumer payment sector. The growth of this sector is vital to achieve the goal to further deepen financial inclusion across the country," Kalpesh Kikani, CEO, Piramal Alternatives, said.

Piramal’s performing credit fund, sized at over $300 million, was launched in 2020 and is anchored by Canada’s pension fund CDPQ and some other investors, in addition to the Piramal Group.

TSI did not immediately respond to a request for comment on Sunday.

Incorporated in 2006, TSI manages 8,000 brown label ATMs in India. In 2013, private equity firm CX Partners acquired a 75% stake in the business for approximately 150 crore from its ASX-listed Australian parent Transaction Solutions International Ltd (TSN). Thereafter, in 2017, CX Partners sold this stake back to the parent TSN for approximately 244 crore. The growth of ATM operators was stymied by the surprise denotification of high value currency notes by the Indian government in November 2016, which propelled digital payments. In recent years, many ATM operators have bounced back after banks began outsourcing the management of their ATM machines.

TSI India manages ATMs for nine public sector banks and two private sector banks such as State Bank of India, Central Bank of India, HDFC Bank and Punjab National Bank. In FY23, the company reported revenues of 290 crore and Ebitda of 100 crore.

TSI was appointed as one of the vendors for the recently concluded bids for managing SBI ATMs and AGS Transact was among the other vendors. TSI will manage 3,375 ATMs for SBI with an option to increase the ATM count by 25%. Similarly, in FY23, TSI won a tender to manage 2,500 Central Bank of India ATMs.

Meanwhile, Piramal Alternatives is in the process of raising over $1.5 billion in private capital across four funds -- including its performing credit fund, Bloomberg News reported in July.

CDPQ (Caisse de depot et placement du Quebec) contributed around 75% of the $300 million for credit fund.

The fund offers credit to mid-market companies in sectors such as manufacturing, consumer, industrial, healthcare, pharmaceuticals, logistics, among others. Typically, performing credit funds target companies that have free cash flows but are unable to raise capital from banks because of the banking system’s inability to fund specific types of transactions – such as acquisition financing or tenor extensions. Performing credit funds generally promise mid-teen to high-teen returns to their investors.

In November, private equity firm True North raised 1000 crore towards its first performing credit fund.

Other portfolio companies of Piramal’s performing credit fund include specialty chemicals firm Harmony Organics, precision engineering company Azad Engineering, and hospitality firm Impresario Entertainment.

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ABOUT THE AUTHOR
Ranjani Raghavan
Ranjani Raghavan writes about the Indian investment ecosystem with a focus on venture capital, private equity and startups. Outside of work, she enjoys sketching and birding. You can find her @ranjanir_
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Published: 03 Dec 2023, 11:04 PM IST
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