Infibeam’s board has approved the acquisition and amalgamation of payment gateway company Avenues India (CCAvenue), the company has told the stock exchanges. It’s going to be an all stock deal: with 260 shares of Infibeam being given for every 100 shares shares of CCAvenue. The acquisition values CCAvenue at a net worth of Rs 123.54 crores, while valuing Infibeam at a consolidated net worth of Rs 781.82 crores, as on March 31st 2017 (FY17).
CC Avenue reported a turnover of Rs 157.59 crores in FY17, according to the filing.
This acquisition follows the signing of a memorandum of understanding between the two companies in February this year, when Infibeam put in Rs 150 crores into the business for 7.5% of the company. Around 3.85% of Avenues India had already been held by NSI Infinium Global (an Infibeam subsidiary), picked up in June last year, for Rs 60 crore.
In addition to this acquisition, Infibeam, last quarter, along with CCAvenue, signed an agreement for investment into RemitGuru as an Anchor Investor. RemitGuru is a digital cross border money remittance solution. Customers from more than 25 countries send money to India through this platform in 8 currencies. “This investment would be helpful in increasing the cross-border e-commerce business transactions and making the remittance business cash free through fin-tech solutions,” the company said. Prior to this investment, CCAvenue already held 26.76% equity stake in RemitGuru. In an earnings conference call, Infibeam founder and CEO Vishal Mehta explained that it links directly with e-commerce: “rather than sending money to your friends and family in India for going to buy products and services, it can be utilized directly”…”the second opportunity is also to be able to capture the share of wallet of whoever is the recipient”.
Why is Infibeam acquiring CCAvenue
1. Profit: Mehta said in an earnings call that the merger “of CCAvenue into Infibeam will be very highly cash on profit creator for our business”. Mehta had mentioned that CCAvenue is growing at a CAGR of more than 45% to 50% year-over-year, and the Infibeam would see “another [Rs] 200 Crores being added into the services revenue’s portfolio in terms of revenue. In terms of profitability, you would see another [Rs] 40 to 50 Crores of net profits being added onto the framework.
2. Additional services for merchants: In the Q3 earnings call, Infibeam had said CCAvenue processes [Rs] 15,000 Crores of transactions for around 100,000 merchants. Infibeam had over 66,000 merchants by the end of Q3 FY17. In the Q4 earnings conference call, Infibeam founder and CEO Vishal Mehta said that “Platform with payment is a very, very interesting asset in our opinion. It allows us to provide a very seamless experience for merchants to onboard and to be able to transact and gain customers online with our investments and our announcements of amalgamation of CCAvenue as part of our strategic investment we believe that the synergistic opportunity will amplify our platform framework in the domestic markets and we can provide a one-stop solution to merchants to be able to onboard.”
“With payment platform of CCAvenues, Infibeam is a unique one-stop solution provider in the e-commerce segment providing Purchases to Payments solutions under one roof”…”Integration of Payment platform with logistic & warehousing, ad and domain registry along with data centre and data analytics, the value added services provided by Infibeam makes a full circle in providing all services under one roof to the customers.”
3. Bill payments: CCAvenue is one of the original payment gateway companies in India, with over 15 years of operation. They have “multi-channel payment platform with tie-ups with more than 48 banks for net banking with UPI; Debit and credit card payments covering Master and Visa as well as RuPay and CCAvenue will also soon have Bharat Bill Payment System, which will facilitate all bill payments of utilities and services amongst others.”
4. Allow merchants to accept wallet based payments: “We also believe that it is a great opportunity for us because for those people who are ordering using prepaid instrument and with our investment in CCAvenue and that we can support so many prepaid instruments that it allows us to provide such instruments to so many merchants.”