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Spends management fintech Zaggle’s IPO to open on 14 September

Spends management fintech Zaggle’s IPO to open on 14 September
  • The IPO comprises a fresh issue of shares aggregating to ₹392 crore; and an offer for sale up to 10,449,816 shares.
  • Bids can be made for a minimum of 90 equity shares and in multiples of 90 thereafter.
  • Its net will be used for customer acquisition and retention, techn development, loan payment and general corporate purposes.
Zaggle Prepaid Ocean Services, a spends management fintech company, said on Monday that its initial public offer (IPO) will open on September 14 and close on September 18. It has set a price band of ₹156-₹164 per equity share. Companies that offer software as a service (SaaS) are known as SaaS companies.

Bids can be made for a minimum of 90 equity shares and in multiples of 90 equity shares thereafter.

The IPO comprises a fresh issue of equity shares aggregating to ₹392 crore and an offer for sale up to 10,449,816 shares by selling shareholders.

Its promoters Raj P Narayanam, Avinash Ramesh Godkhindi will be selling shares along with VenturEast Proactive Fund LLC, GKFF Ventures, VenturEast SEDCO Proactive Fund LLC, Ventureast Trustee Company, Zuzu Software Services; and Koteswara Rao Meduri.

The company proposes to utilize its net proceeds towards customer acquisition and retention, technology development and towards re-payment or pre-payment of certain borrowings, and general corporate purposes.

ICICI Securities, Equirus Capital, IIFL Securities and JM Financial are the book running lead managers to the offer.

About the company

Zaggle, which was incorporated in 2011, is a SaaS and fintech company that operates in the B2B2C segment. It interacts and interfaces with customers which are businesses and end users who are employees.

It claims to be a leading player in spend management, with more than 50 million prepaid cards issued in partnership with banks and more than 2.27 million users served, as of March 31, 2023.

It has diverse offerings like fintech products and services, and a portfolio of SaaS, including tax and payroll software, it said in its RHP.

The overall market for spend management software and services was estimated to surpass ₹20,000 crore by Fiscal 2027. The outsourced spend management estimated to be around 60% during that period, as per Frost & Sullivan.

It has no peers neither in India nor abroad.

Financials & Risk Factors

Its profits in FY23 fell by 45% in FY23, as compared to the year before. It also experienced negative operating cash flows of ₹15.6 crore in FY23 primarily due to an increase in trade receivables of ₹58 crore.

Its revenues, however, have been steadily growing due to increases in user base, accompanied by an increase in spending by the users. An increase in program fees received due to an overall increase in business scale also aided the growth.

Particulars

FY23 (consol)

FY22 (standalone)

FY21 (standalone)

Revenues

₹554 crore

₹371 crore

₹240 crore

PAT

₹22.9 crore

₹41.9 crore

₹19.3 crore

Source: RHP

In its risk factors, the company said that it operates in a highly competitive industry. It may experience significant fluctuations in financial performance due to a number of factors like — inability to attract new customers, grow or maintain its customer retention rate, expand usage within enterprises, gain continued acceptance of its products and expand use and more.

Further, its marketing efforts may not attract additional customers on a cost-effective basis. The businesses of its banking partners are regulated by the RBI and any change in the RBI’s policies, decisions and regulatory framework could have an adverse effect.

Its international expansion efforts may not be successful and may expose it to complex management, legal, tax, competition and economic risks. Its sites, networks, and systems may experience security incidents or breaches in future.

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