Radiant Cash Management Services IPO : 7 things to know
Radiant Cash Management Services Ltd, the company offering cash management and ATM management services to banks and financial institutions, had filed its draft red herring prospectus (DRHP) in October 2021 and SEBI is has already given its observations and approval for the IPO in January 2022.
Normally, the DRHPs are approved by SEBI within a period of 2 to 3 months unless there are other queries or clarifications that the regulator has.
The IPO of Radiant Cash Management Services Ltd will be a combination of a fresh issue and an offer for sale and the next steps will be commenced once the company finalizes on its IPO dates and the indicative IPO price band.
7 interesting facts to know about Radiant Cash Management Services Ltd IPO
1) Radiant Cash Management Services Ltd has filed for an IPO with SEBI and also got approval for the same. The IPO comprises of a fresh issue of Rs.60 crore and an offer for sale of 301.25 lakh shares by the promoters and the early private equity backers of the company.
However, since the price band for the proposed Radiant Cash Management Services IPO has not been announced still, the size of the fresh issue / IPO / offer for sale is not known with any degree of certainty. Radiant offers logistics services to banks which including cash management, ATM logistics, cash movement etc.
2) Let us talk about the offer for sale (OFS) portion of the IPO first. A total of 301.25 lakh shares will be sold by the early investors and the promoters as part of the offer for sale. The OFS component will not result in any fresh fund infusion or dilution of the capital or the EPS.
However, the selling of stake by the promoter will increase the free float of the company and facilitate listing of the stock. This is normally the first step for the company to arrive at an indicative market-driven valuation of the company for future currency needs.
Out of the total offer for sale, the promoter Colonel David Devasahayam will offer 101.25 lakh shares while private equity investor, Ascent Capital, will offer the balance 200 lakh shares in the OFS. Ascent currently holds 37.21% or 3.76 crore shares in Radiant Cash Management prior to the IPO. These are the only two sellers in the offer for sale of the company.
3) The fresh issue portion of Rs.60 crore will be spread across 3 major allocation lines. For instance a sum of Rs.23.92 crore will go towards capital expenditure while another Rs.20 crore will go towards working capital needs of the business.
The balance sum after taking care of the issue expenses, will be used for general corporate purposes by the company.
4) Radiant Cash Management was founded in the year 2005 by Colonel David Devasahayam (who is one of the sellers in the OFS). The company is an integrated cash logistics player with an established presence in retail cash management (RCM) segment of the cash management services industry in India.
It is one of the major players in the RCM segment in terms of network locations or touch points and it competes with the likes of AGS Transact and CMS, which also operates in approximately in the same line of business.
Radiant has 5 business verticals viz. cash pick-up and delivery, network currency management, cash processing, cash in transit and value added services.
5) Most of the leading private banks are the clients of Radiant Cash Management, as is SBI. Its client list includes such marquee names like Axis Bank, Citibank, Deutsche Bank, HDFC Bank, ICICI Bank, Kotak Bank, SBI, HSBC as well as Yes Bank.
Its customer base goes beyond just the banks as the company also services retail chains, NBFCs, insurers, ecommerce logistics players, railways and petroleum distribution outlets across India.
6) Radiant Cash Management currently provides services across 12,150 PIN codes in India covering all districts (other than Lakshadweep). It has over 42,400 touch points spread across over 4,700 locations.
Radiant Cash Management reported sales revenues of Rs.222 crore for FY21 and net profits of Rs.32.43 crore implying net margins at a healthy clip of 14.61%. Revenues did take a marginal hit in FY21 due to the pandemic and the restrictions on contact intensive businesses.
7) The IPO of Radiant Cash Management Services Ltd will be lead managed by IIFL Securities, Motilal Oswal Financial Services and Yes Securities. They will act as the book running lead managers or BRLMs to the issue.
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