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NASDAQ listed Ebix acquires 80% in Itz Cash for $120 million

NASDAQ listed Ebix has acquired 80% stake in ItzCash for Rs 800 crore ($120 million) from US-based, giving investors Matrix Venture Partners, Intel Capital, and Lightspeed Venture Partners exits. The Essel Group (Zee) will continue to hold 20% in the company. Ebiz is a supplier of on-demand software and e-commerce services. Ebix supplies software to the insurance, financial, e-governance and healthcare industries, and currently operates in 40 countries, including India.

Under the terms of the agreement, ItzCash, which is probably India’s oldest wallet company, was valued at a total of approximately $150 million. Ebix will pay upfront cash of $76 million and a contingent earn out of up to $44 million payable over a period of 3 years from the closing of the deal. This is the second instance of a listed company buying a wallet license holder in India, after Calpian bought Money On Mobile, in 2014.

Note that ItzCash is increasing its offerings and is looking at the Ebix investment to diversify into the insurance segment. Ebix has a telemedicine service and wants to create an offering for consumers through ItzCash’s physical 75,000 outlets. “It offers insurance carriers and brokers a gateway into reaching out to this vast network described above, helping create new integrated insurance and finance offerings,” the company said in a statement.

The investment will also allow ItzCash to expand to markets like Australia and Brazil where Ebix has expertise in distribution.

ItzCash is among the oldest payments cards companies, beginning in 2006 as a prepaid card and wallet service. It also expanded into a domestic remittance service business with franchise operations as ItzCash World

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Financials and new businesses

The payments company has reported revenues of Rs 250 crores for the financial year 2016-17 (FY17), a growth of 40% year on year (from approximately Rs 180 crore), and more importantly, turned profitable. Bhavik Vasa, Chief Growth Officer at Itz Cash said in a statement that the company is now diversifying into financial services and corporate products.

Some of the new businesses started by ItzCash include:

– Cross-border remittance: It partnered with Prabhu Money Transfer, a remittance company in Nepal, allowing Nepali migrants in India to send money back home.
Third party POS terminals: The company said in April that it will deploy 100,000 POS terminals targeting small businesses and shopkeepers in the year. It had started the POS business in early December 2016 and so far has deployed 30,000 terminals. This is a new segment for ItzCash, and is a space that already has competition from Mswipe, Ezetap, Oxigen and PayU.
– Invested in Finly: In February, ItzCash made an undisclosed equity investment in Bangalore-based expense management company Finly which works in the corporate expense management space.
–  BBPOU: In July 2016, it got an approval from the RBI to launch a Bharat Bill Payments Operating Unit (BBPOU). The National Payments Corporation of India (NPCI) set up the Bharat Bill Payment System (BBPS), a centralized interoperable bill payment system. BBPOUs are units which can create an agent network and will be responsible for on-boarding billers and aggregators.

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