FSS Technologies to raise $200 million to fuel global expansion plans

Financial Software and Systems (FSS), a Rs 600 crore payment systems company, is close to raising $200 million through the private equity and debt route to fuel its expansion plans. The Chennai-based privately held company which offers a bouquet of services in the areas of electronic payment, financial transaction processing solutions and services, had earlier raised three rounds of private equity infusion from funds managed by Carlyle, New Enterprise Associates (NEA) and Jacob Ballas Capital India. While the debt fund-raise of Rs 750 crore is understood to have been finalised, the equity infusion from a private equity fund is expected to be in by first quarter of next financial year.

Nagaraj V Mylandla, Founder & MD, FSS confirmed to Business Standard, that the Rs 750 crore debt has been wrapped and details of the same will be shared shortly. "We have been pretty much low on debt for the past many years and this is the first time around we have raised this quantum of debt. Over the past, we have infused total equity of Rs 550 crore and going forward, we are talking to private equity funds for an infusion of Rs 250 crore in tranches and we should be able to finalise the first infusion by June of 2013," Mylandla said.

Of the Rs 1,000 crore which will be raised, Rs 500 crore will be towards switch and ATM deployment, while Rs 250 crore be for merchant-related services through POS, mobile, internet, financial inclusion, MPOS and micro ATM including Aadhar-related payments and the rest Rs 250 crore will be for FSS IP-related product developmentôenhancement of and expenditure towards expansion in the overseas market. FSS had earlier raised two rounds of equity infusion from global private equity fund Carlyle and subsequently another $60 million from NEA and Jacob Ballas, giving an exit to Carlyle. The promoter's and employees currently hold 60 per cent, while the PE funds hold the rest 40 per cent. It is learnt that the new investor will come on board through fresh issue of equity shares. FSS, which reported revenues of Rs 405 crore for last fiscal is looking to touch revenues of Rs 580 crore by end of Fy13 and is targeting to scale this up to Rs 720 crore for FY14. FSS has established a global footprint in Australia, Canada, Europe, West A

sia, Singapore and the United States and current derives 20 per cent of its revenues from global operations, and which is expected to be shored up to 30 per cent over two years.

The private equity interest in the banking and financial services segment, which is usually among the top three segments, has been lagging during the end of last calendar year. "Global uncertainties, a slowdown in the Indian economy and a lack of enabling policy framework in Q3 and Q4 '12 are some of the main reasons for PE firms being cautious in investing in India. While the Banking Amendment Bill was passed recently, bills such as FDI in insurance are still pending. We believe that guidelines for the new banking licences and positive measures such as deferment of the GAAR will help usher in positive sentiment. This enthusiasm has been observed with the recent spurt in the country's stock markets which is one of the indicators demonstrating the improving sentiments of investors. We think that while PE investments in BFSI or any other sector may not see a lot of action in the near future, there will be signs of improvement in the coming quarters," said Manoj K Kashyap, Leader, Financial Services, PwC India.