Nasdaq Listed Ebix to Acquire CentrumDirect Consolidating Indian Forex Market Share
CDL has a turnover of Rs10,000 crore serving 3 million customers during this fiscal; final approvals for agreement to be finalized in next 45 – 60 days
Ebix, Inc., an international supplier of on demand software and ecommerce services to the insurance, financial, e-governance and healthcare industries, has agreed to acquire India based CentrumDirect Limited (CDL), a leading Indian foreign exchange and outward remittance business for approximately $175 million. CDL will be integrated into Ebix’s Financial Exchange EbixCash offering in India and abroad, with key CDL business executives becoming an integral part of the combined EbixCash senior leadership.
The agreement while approved by the Centrum Board, is subject to its shareholders and other regulatory and commercial approvals. The customary process for such approvals can take a timeline of 45 to 60 days.
CentrumDirect Limited (CDL), a step-down subsidiary of Centrum Capital Limited, is one of the leading authorized Category II foreign exchange service providers in India. CDL provides a wide spectrum of travel related foreign exchange services ranging from prepaid travel cards, travelers cheques, foreign currency cash, demand drafts, inward and outward remittances for permitted purposes, travel insurance and global calling cards to its retail and institutional customers. CDL has achieved a gross turnover of Rs10,000 crore serving 3 million customers during this fiscal.
Ebix did not use any investment bankers for the transaction. Ebix intends to fund the entire transaction in cash, using its existing bank line and internal cash reserves, though it retains the option at its sole discretion of paying up to $60 million in Ebix stock priced based on the average share price at closing. In the calendar year 2017, CDL had revenues of $37 million and EBITDA margins of approximately 25 percent. Ebix believes that the business can continue to grow at the rate over 20 percent annually with operating margins of 30 percent or more, once fully integrated. Ebix expects the acquisition to be immediately accretive to its earnings and forecasts it to generate $0.25 in increased diluted EPS.
CDL’s Forex Exchange has an approximate 70 percent market share of India’s airport Foreign Exchange business encompassing 24 international airports like Delhi, Mumbai, Bangalore, Chennai and Kolkata International airports, while conducting over 1 million transactions per annum. The company is also in the process of initiating contracts with a number of international airports outside India in countries like Sri Lanka, Singapore, Bangladesh, Maldives and Seychelles to name a few. The CDL Exchange also has a 15 percent market share in India’s fast growing $1.5 billion education outward remittance business.
The CDL exchange will bring thousands of travel agents, large corporates, SMEs and new outlets to EbixCash’s existing travel network offering. EbixCash through its travel portal Via.com is one of Southeast Asia’s leading travel exchanges with over 110,000 distribution outlets and 8000 corporate clients, processing over 24.5 million transactions every year.
Ebix Chairman, President and CEO Robin Raina said, “The acquisition of CDL provides us with new abilities in niche financial exchange sectors while expanding our footprint in India and establishing our EbixCash Financial Exchange as the largest financial exchange in the country. We have been eager to build a strong footprint in India’s airports and shipping ports, as their high levels of customer traffic provide recurring sources of revenue and income for any Financial Exchange”.
CDL’s CEO and Managing Director, T.C.Guruprasad said, “We are thrilled to join Ebix and contribute to building a world-leading exchange. We believe that the synergies between EbixCash and CDL are at multiple levels and the CDL exchange when complemented with EbixCash’s portfolio of finance, insurance and healthcare services, will set the foundations of a very powerful and scalable business opportunity”.
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