Zaggle Prepaid Ocean Services IPO: All You Need To Know
Zaggle Prepaid Ocean Services Ltd. will launch its initial public offering on Sept. 14.
The fintech product and solution provider plans to raise Rs 392 crore via a fresh issue.
The company also plans to offload 1.04 crore equity shares via an offer for sale. Among other shareholders, Zaggle's OFS comprises two promoters—Raj Narayanam and Avinash Godkhindi—who are selling their shares. The price band is fixed in the range of Rs 156–164 per share.
The company adjusted its initial offering size to Rs 392 crore from Rs 490 crore previously, following two pre-IPO placements in August, which brought in Rs 98 crore from investors.
The OFS portion of the offering was reduced from 1.05 crore equity shares to 1.04 crore shares due to the departure of one of the selling shareholders, according to the red herring prospectus.
Out of the total IPO size, 75% is reserved for qualified institutional buyers, 15% for non-institutional investors, and the remaining 10% for retail individual investors.
Issue Details
Issue opens: Sept. 14.
Issue closes: Sept. 18.
Fresh issue size: Rs 392 crore.
OFS size: 1.04 crore equity shares.
Face value: Re 1 apiece.
Fixed price band: Rs 156–164 per share.
Minimum lot size: 90 shares.
Listing: NSE, BSE.
Business
Incorporated in 2011, Zaggle Prepaid Ocean Services is a company that offers a diversified range of fintech products and services. The company has created a market niche in India and offers a combined solution for spend management through prepaid cards and employee management through software-as-a-service.
Zaggle has one of the largest numbers of issued prepaid cards in India through banking partnerships and represented approximately 16% of India's total prepaid transaction volume, as of March 31.
The firm's core portfolio includes:
Propel, a streamlined SaaS platform for incentives and recognition.
Save—a SaaS-based platform and mobile application for business spend management.
CEMS—a customer engagement management system for merchants.
Zaggle Payroll Card—a prepaid payroll card that allows customers to pay contractors, consultants, and employees.
Zoyer—an integrated, data-driven, SaaS-based business spend management platform.
Zakey—a contactless payment system.
As of March 31, the company had 22 lakh users and 5 crore co-branded prepaid cards. Key partners include Yes Bank Ltd., IndusInd Bank Ltd., Visa and DBS.
Use Of Proceeds
Customer acquisition and retention expense: Rs 300 crore.
Technology and product development: Rs 40 crore.
Repayment of borrowings: Rs 17 crore.
General corporate purposes.
Risk Factors
Conversion of trial version users and retention of existing customers play a very important role in the company's operations.
Any termination or failure to maintain partnerships with banking partners or changes in interchange fees could adversely affect the business. As of March 31, revenue from programme fees and interchange fees as a percentage of total revenue stood at 30% and 22%, respectively.
The company does not have any listed industry peers in India or abroad, making it difficult to benchmark and evaluate the firm's financial performance.
The company experienced negative operating cash flows in financial year 2023 and had a negative net worth in fiscals 2022 and 2021. This factor could make getting future financing difficult or expensive for the firm.
The company is exposed to counterparty credit risk and any delay or non-receipt of payments may affect cash flows and results of operations.
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