The UK-based Travelex Group has signed a memorandum of understanding (MoU) with the LKP Forex Ltd, a full-fledged money changer and a 100 per cent subsidiary of LKP Merchant Financing, for a phased buyout of the company.
Travelex will buyout LKP Forex over the next three years in phases. The total consideration will be around Rs 120 crore.
Till the buyout is completed, the management control will remain with LKP Merchant Financing. The outfit is likely to be renamed as LKP Travelex, sources said.
Mahendra Doshi, vice-chairman, LKP Merchant Financing Ltd, refused to comment on the deal citing "confidentiality".
In March last year, the Travelex Group acquired Thomas Cook Global & Financial Services at $450 million.
However, Thomas Cook's business in India, Pakistan, Bangladesh and Sri Lanka continues to be run independently by the original promoter, a German company.
"By acquiring LKP Forex the Travelex Group wants to get a foothold in India from where they can expand to cover the entire south east Asia. It may not end up competing with Thomas Cook which is more into leisure and travel business and not money changing," analysts said.
LKP Forex is expected to utilise the sale proceeds partly to write off its debt and the rest will go to strengthen its broking business.
LKP Forex was hived off from the parent in the beginning of the new fiscal year. Last year, the money changing related business posted a profit of around Rs 6 crore on a turnover of around Rs 19,000 crore.
Post acquisition by Thomas Cook Global & Financial Services, Travelex has offices in 31 countries and corporate relationships in 97 countries spanning the globe, serving over 29,000,000 customers each year.
LKP Forex recently embarked on a franchisee appointment to expand its existing retail network in Northern India. It has 50 branches and 97 franchises across 28 cities making it the second largest player in the $2-billion local money-changing business.
Though there are about 1,500 players, only 12 of them have more than 10 branches across the country. The top slot belong to Thomas Cook, LKP Forex and Trade Wings. Tata-Amex Finance, Wallstreet, TT Tradeals, Pheroze Framroze, Weissman Finance, Cox & Kings and Nucleus Finance have more than 10 branches.
These players collectively control 85 per cent of the business. The RBI has recently given over 600 new licences for money changing business.
