US Based Ebix Invests $123 Mn In ItzCash, Acquires 80% Stake; Matrix, Lightspeed, Intel Exit

US-headquartered Ebix Inc., has invested $123 Mn (INR 800 Cr) in Mumbai-based payments solution firm ItzCash against 80% stake in the company. The funding has been done at a valuation of $150 Mn and Ebix will now be the majority shareholder in the company.

As told by the company spokesperson in an interaction with Inc42, with this infusion, the company’s earlier backers, Matrix Partners, Lightspeed Venture Partners and Intel Capital have exited for returns between 3X-5X. However, Essel Group, who prior to the deal was the largest stakeholder in the firm, still holds 20% stake in ItzCash.

With the new investment by Ebix, the company is looking to foray into areas such as credit, insurance, healthcare, and investments to accelerate growth momentum going forward.

“Ebix’s global reach and operations opens international expansion opportunities for ItzCash. We are keen to replicate our proven model, technology platform, and operating experience to other emerging markets for financial services” says Naveen Surya, founder of ItzCash.

The ItzCash Journey: A Snapshot

ItzCash was one of the early movers in digital payment space. Founded in 2005 by Naveen Surya, the company has since expanded into new businesses verticals such as remittances, financial services, corporate solutions, PoS and Payment gateway.

Along with the oldest ItzCash card launched in 2005, the company provides several pre-paid cards such as temporary payroll card, transport and petro card, salary cards, and corporate disbursements among others. These prepaid cards can be used at any offline or online touch point where third-party payments are accepted. The company also has partnerships with Visa, RuPay, and MasterCard and banks such as HDFC, IDBI, and DCB.

To date, the firm’s early investors have poured in around $51 Mn in the company. Ashok Goel, a serial entrepreneur and Vice Chairman and Managing Director of Essel Group company – Essel Propack – is currently the Chairman at ItzCash.

Bhavik Vasa, Chief Growth Officer, ItzCash said, “Our ethos lies in creating a PhyGital network – digital cash with physical confidence and reach. For over 10 years, we have always focused on digitising physical cash and empowering digital commerce. We will continue to focus on bridging and connecting the larger segment of the aspiring Bharat with our multi-product, Omni-channel strategy”.

ItzCash And Ebix: The Synergy

Ebix is a leading international supplier of on-demand software and ecommerce services to the insurance, financial, e-governance and healthcare industries. With 40+ offices across Australia, Brazil, Canada, India, New Zealand, Singapore, the US, and the UK, Ebix claims in an official statement to have conducted in excess of $100 Bn in insurance premiums annually on its platforms,

“With the youngest tech-savvy society, the largest middle class, a 1.3 billion population, a country committed to going digital and a growth rate of 7% plus, India is an emerging economic superpower today. We are big believers in the power of exchanges and, thus, have been keen to take an early position in India in terms of powering financial and insurance exchanges.” Ebix Chairman, President and CEO Robin Raina said.

Having reportedly deployed 25,000 point of sale machines in the last 5 months, the company now intends to deploy 100,000 POS machines by the end of the year across the length and breadth of India. Also, it offers an opportunity to expand the ItzCash services to markets like Australia and Brazil where Ebix has a strong distribution expanse.

Furthermore, the company also intends to extend health content exchanges in India through Ebix Telemedicine, offer insurance carriers and brokers a gateway to its vast network and cross-selling opportunities to sell each other’s complementary services to existing clients of the two companies.

Where The Strength Lies For ItzCash?

As told by Naveen to Inc42 in an earlier interaction, the company currently works with a team of 450+ and claims to be consistently growing at a CAGR of 60% for the last 3 years on all business metrics of volumes, revenues and margins. It also claims to be the largest non-bank PPI (pre-paid payment instrument) in the country to have crossed the $2 Bn mark on a card-base of 110 Mn.

With a distribution network of 75,000+ physical retail outlets, the company works with a transaction success rate of 99% for approximately $2.16 Bn (INR 14,000 Cr) in payment volume and processes approximately 600,000 transactions per day.

It works closely with corporates such as Amway, DishTV, Flipkart, BookMyShow, Uber, IRCTC, Satin MicroFinance and more, helping them acquire net new customers by making products available at the middle of the pyramid.

In June 2016, OYO had announced a strategic partnership with ItzCash to tap the next 500 Mn underserved Indian consumer segment. With this partnership, ItzCash aimed to become aggressive about hotel booking and planned to double its volume and clock $61.7 Mn (INR 400 Cr) by FY18.

Editor’s Note

ItzCash was a first mover in many ways – embracing digital and cashless, automating the process and believing in the vision enough to stick to it. It is among the few payment solutions working towards bringing options for the middle and last sections of the pyramid.

A company that has been growing consistently with more than 50% CAGR on all fronts, and which has proven its business model from the days of the early consumer Internet has no doubt had its eye on the prize – either a successful IPO or a major acquisition deal. With Digital India becoming more of a reality per day, it remains to be seen how ItzCash plans to battle it out in the fintech and ecommerce arena with the new funding.