Akash Jha
The FinTech-SaaS company Zaggle Prepaid Ocean Services has decided to launch its public offering on September 14, with a likely fund-raising target of approximately Rs 563 crore.
The initial public offering consists of a fresh issue of shares worth Rs 392 crore by the company and an offer-for-sale of 1,04,49,816 equity shares by eight selling shareholders, including promoters Raj P Narayanam and Avinash Ramesh Godkhindi.
GKFF Ventures, VenturEast SEDCO Proactive Fund LLC, Ventureast Trustee Company, Zuzu Software Services, and Koteswara Rao Meduri are additional selling shareholders in the OFS.
Offer Size
If the offer price is deemed to be Rs 164 per share, the price at which the pre-IPO placement was performed by the business in August of 2023, the total issue size may be equated to Rs 563.38 crore (new issue Rs 392 crore + OFS Rs 171.38 crore).
The provider of financial technology products and services issued 59.75 lakh equity shares in a pre-IPO placement in August 2023 at a price of Rs 164 per share, for a total of Rs 98 crore. Two of the company’s largest private placement investors were ace investor Ashish Rameshchandra Kacholia and Bengal Finance & Investment.
A reduction of Rs 98 crore brings the total size of the new offer down to Rs 392 crore.
The company may allocate 60% of the issue size to anchor investors, and up to 75% of the issue size has been set aside for qualified institutional buyers. More specifically, institutional investors will receive 15% of the IPO shares, while retail investors will receive 10%.
On September 13, the anchor book will be open for one day, and on September 18, the offer will be final.
Objectives of Issue
Spend management market leader Zaggle, with its unique value proposition and broad customer base, plans to invest Rs 300 crore in customer acquisition and retention and Rs 40 crore in technology and product development over the course of the next three fiscal years, from FY24 to FY26.
The company will use the proceeds of the latest offer to settle its obligations totaling Rs 17,08 crore, with the remainder going toward operational expenses.
Its outstanding debt was Rs 90.03 crore in March of 2023.
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Financial Performance
Zaggle, which has been in business since 2011, has reported a consolidated net profit of Rs 22.9 crore on revenue of Rs 553.46 crore for the fiscal year ending in March FY23. The company serves a market sector that includes both businesses and their employees as customers and end users. The figures cannot be compared to those of prior fiscal years; they stand on their own.
As of March 2023, the company claimed to have serviced over 0.23 crore customers and distributed over 5 crore prepaid cards in conjunction with financial partners, making it the market leader in the field of expenditure management.
Businesses from the banking, technology, healthcare, manufacturing, fast moving consumer goods (FMCG), infrastructure, and automobile sectors are among its vast customer base. TATA Steel, Persistent Systems, Vitech, Inox, Pitney Bowes, Wockhardt, Mazda, PCBL (RP – Sanjiv Goenka Group), the Hiranandani group, Cotiviti, and Greenply Industries are just a few of the companies with whom it has partnered.
There were 1,832 enterprise customers and 579 small and medium-sized business customers as of March 2023, with an average of 943 users per company. As of that date, it had issued 1.08 crore active cards (those that had not yet expired) to 2,411 customers in India who were using Zaggle’s software to keep track of employee, business, channel partner, and consumer spending.
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The remaining public shares are held by investors like Zuzu Software Services (17.8%), which is the business’s largest shareholder, and VenturEast Proactive Fund LLC (7.32%). The promoters own 57.91 percent of the company.
Merchant bankers for the issuance include ICICI Securities, Equirus Capital, IIFL Securities, and JM Financial, with KFin Technologies acting as the issue’s registrar.
