Zaggle Prepaid Ocean Services IPO opens on September 14

Zaggle Prepaid Ocean Services IPO opens on September 14

FinTech-SaaS company Zaggle Prepaid Ocean Services has decided to open the public issue on September 14, with a likely fund raising plan of around Rs 563 crore.

The initial public offering comprises 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.

VenturEast Proactive Fund LLC, GKFF Ventures, VenturEast SEDCO Proactive Fund LLC, Ventureast Trustee Company, Zuzu Software Services, and Koteswara Rao Meduri are other selling shareholders in the OFS.

Offer Size

The total issue size may be amounted to Rs 563.38 crore (fresh issue Rs 392 crore + OFS Rs 171.38 crore) if the offer price is considered as Rs 164 per share, the price at which the pre-IPO placement had undertaken by the company in August, 2023.

The financial technology products and services provider had undertaken a pre-IPO placement of 59.75 lakh equity shares in August 2023, at a price of Rs 164 per share, amounting to Rs 98 crore. Ace investor Ashish Rameshchandra Kacholia, and Bengal Finance & Investment were the biggest investors in the company, buying 1.86 percent shares each via private placement.

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Accordingly, the size of the fresh issue has been reduced by Rs 98 crore to Rs 392 crore.

The firm has reserved up to 75 percent of the issue size for qualified institutional buyers and of which 60 percent may be allocated to anchor investors. Further, the remaining 15 percent and 10 percent IPO shares are reserved for high networth individuals and retail investors, respectively.

The anchor book will be opened for a day on September 13, while the offfer will close on September 18.

Objectives of Issue

Zaggle, a leading player in spend management with a differentiated value proposition and diversified user base, will make use of net fresh issue proceeds for customer acquisition and retention at a cost of Rs 300 crore, and development of technology and products amounting to Rs 40 crore, in three financial years FY24 to FY26.

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The company will also be repaying its debts of Rs 17.08 crore via fresh issue money, and the remaining will be for general corporate purposes.

As of March 2023, its total outstanding borrowings were Rs 90.03 crore.

Financial Performance

Incorporated in 2011, Zaggle, which operates in a segment where it interacts and interfaces with customers (businesses) and end users (employees), has recorded consolidated net profit of Rs 22.9 crore on revenue of Rs 553.46 crore for the financial year ended March FY23. The numbers are not comparable with previous financial years which are standalone numbers.

The company claimed to be the leading player in spend management, with more than 5 crore prepaid cards issued in partnership with banking partners and more than 0.23 crore users served, as of March 2023.

Its network of corporate customers includes several industries like banking and finance, technology, healthcare, manufacturing, FMCG, infrastructure and automobile industries. It has relationships with several corporate brands like TATA Steel, Persistent Systems, Vitech, Inox, Pitney Bowes, Wockhardt, MAZDA, PCBL (RP – Sanjiv Goenka Group), Hiranandani group, Cotiviti and Greenply Industries.

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As of March 2023, it had 1,832 corporate accounts and 579 SMB (Small and medium sized business) accounts, with average user base per business was 943 users. It had issued 1.08 crore active cards (that had not expired as of that date) to 2,411 customers across India, which used Zaggle's software to manage spends related to their employees, business, channel partners and customers.

Promoters hold 57.91 percent stake in the company and the rest of shareholding is held by public including Zuzu Software Services (the largest shareholder with 17.8 percent stake), and VenturEast Proactive Fund LLC (7.42 percent).

ICICI Securities, Equirus Capital, IIFL Securities, and JM Financial are the merchant bankers to the issue, while KFin Technologies is the registrar.