Digital payments and financial services provider Findi Limited (ASX: FND) has locked in a deal with Union Bank of India (UBI) for the deployment of an additional 900 ATMs across India through its majority owned subsidiary company, Transaction Solutions International (TSI).
Financial boost
The seven year agreement is expected to deliver between $75 million and $80 million in revenue and between $33 million and $38 million in operating earnings (EBITDA).
On an annualised basis, this equates to between $10 million and $11 million in additional revenue and between $4.5 million and $5 million in EBITDA for the company.
The ATMs will be deployed across India over a six month period at a capital cost of about $12 million. The outlay will be financed with the company’s existing funds and bank facilities.
Throughout its duration, the agreement is projected to generate an internal rate of return (IRR) of about 18 per cent for TSI. It also has an option for a one year extension.
Management noted that TSI emerged as the successful bidder in UBI’s tender process for 3,000 brown label ATMs.
UBI is one of the oldest public sector banks in India with its roots stretching back for more than a century. It is also one of India’s largest banks boasting more than 120 million customers.
Number of ATMs soars
The deal will now propel the total number of brown label ATMs operated by Findi in India to nearly 9,000.
In addition, Findi will also hold close to 5,000 white label ATMs across the nation once its recently announced acquisition of Tata Communications Payment is wrapped up. This transaction received the regulatory tick of approval from the Reserve Bank of India earlier this week.
Findi Limited executive chairman, Nicholas Smedley, commented:
“Findi is delighted to deepen the long-term relationship we have with Union Bank of India, and it is pleasing that we have again been entrusted by one of India’s largest banks to continue providing ATMs.
We look forward to completing the deployment of UBI ATMs over coming months, and in parallel, consolidating recent acquisitions and executing our white label ATM and payments bank strategies to deliver the full stack of basic financial services solutions to India’s underbanked and enhance shareholder value.”
Digital payment strategy
Findi has more than 14 years of experience in the consumer payments sector in India – one of the world’s largest developing markets where about 350 million people remain unbanked.
In 2022, the company launched a strategic initiative to evolve into a digital payments bank and deliver cheaper and simpler payment solutions to India, akin to other countries in the developed world.
The company has historically focused on ATMs with the free cashflow from this operating unit used to develop its electronic payment and financial service business throughout rural India.
Acquisition to drive growth
Earlier this year Findi agreed to a $30 million acquisition of BankIT Services – a leading Indian provider of last-mile banking, financial, insurance and payment services.
BankIT brings to the table some 130,000 merchants across all Indian states and territories, expanding Findi payments scope to more than 200,000 merchants across the nation.
Management noted that this “transformational” acquisition could accelerate Findi’s digital payments strategy by 18 months. The transaction is expected to be concluded by the end of March.