Premji buys Rs 350-crore stake in Chennai company

Bengaluru: Premji Invest, the family investment office of Wipro boss Azim Premji, has invested Rs 350 crore ($57 million) to acquire a minority stake in payments-processing and technology company Financial Software & Systems (FSS).

Billionaire Premji's investment vehicle, which manages assets worth over $2 billion, has boarded the company which offers payment services of about 100 banks and financial institutions globally. The Chennai-headquartered company powers retail delivery channels such as ATMs, point-of-sale terminals, prepaid cards, mobile and internet for its clients.

Premji and existing private equity investors - NYLIM Jacob Ballas and New Enterprise Associates (NEA) - are pouring money into FSS, which is planning an initial public offering in the next 24 months.

The company is tracking Rs 850-crore revenue in FY15, up from Rs 614 crore in FY14.

The two-decade-old FSS is a leader in the payments-processing industry, which is posting robust double-digit growth in Asia's third-largest economy. The clients include State bank of India, ICICI Bank, HDFC Bank, Punjab National Bank and Canara Bank. FSS has a footprint across 7,000 cities, towns and villages, handling over 6 million transactions daily. FSS has projected Rs 2,200-crore revenue in the next five years.

"The latest investment from Premji Invest and the active support of our other investors - NEA and Jacob Ballas - will help us to capitalize on emerging opportunities in the digital payments space and help us consolidate our position as a payments technology leader. The fact that we have consistently raised private equity funding in the previous two decades will boost our preparation for an IPO in the next 18-24 months," Nagaraj V Mylandla, FSS founder and managing director, said.

The investment transaction closed on Friday and Avendus capital advised on the deal.

"The payments landscape is undergoing rapid technology scale-up and usage upgradations and outsourcing. We expect FSS, with its products and services capabilities, to play a leading role in this transition," Prakash Parthasarthy, chief investment officer, Premji Invest, said.

Premji Invest has exposure to public and private equities and backs emerging consumer businesses in India, China and US. This is one of the larger investments by Premji into a company with 1,600 employees and presence across North America, Middle East, Africa and Asia Pacific.

Premji, with his networth estimated at $16 billion, has built a portfolio of investments that includes JSM Corp (which runs Hard Rock Cafe in India), fashion e-tailer Myntra, online marketplace Snapdeal and Manipal Global Education Services.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.