Ebix acquires CentrumDirect for $175M to get into money exchange in India
On-demand insurance service provider Ebix announced it has entered into an agreement to acquire India-based foreign exchange service provider CentrumDirect Limited (CDL) for $175 million.
This acquisition will establish EbixCash’s position in the outward remittance and forex markets. The acquisition will also bring thousands of travel agents, large companies, SMEs and new outlets to EbixCash’s Via.com travel exchange offering.
In May last year, Ebix had acquired 80 percent stake in ItzCash for $123 million giving exit to the payments firm's existing venture capital shareholders Matrix Partners, Intel Capital and Lightspeed Venture among others.
Later in November, Ebix acquired Via.com, an online travel and assisted ecommerce exchange, through one of its Singapore subsidiaries.
Speaking on the CDL acquisition, Bhavik Vasa, Chief Growth Officer, Ebixcash, said,
"Investing further on our Phygital strategy for Fintech India, we strive ahead with the largest distribution network for financial products and with Forex and outward remittances we have diversified our portfolio of payments, money transfer, gift card and travel solutions."
Earlier in January, ItzCash parent Ebix had entered into an agreement to acquire the Money Transfer Service Scheme (MTSS) business of Transcorp International. The acquisition allowed Ebix’s financial exchange to remit money sent from abroad through multiple partners.
The CentrumDirect acquisition is Ebix's fifth remittance-related acquisition.
Cross-selling is the key
Firstly, the CDL exchange is highly complementary to EbixCash’s Via.com offering because it now allows EbixCash’s travel outlets to sell forex to its clients.
Secondly, leveraging the cross-selling strategy through its massive merchant base, CDL’s presence at 24 international airports will also lend itself well to marketing the EbixCash brand to Indian and international consumers, besides being a very recurring source of business for EbixCash.
According to the company, CDL’s vast network encompasses 165 outlets spread across 55 cities. It also includes more than 200 franchise partners, 2,000 travel agents, 50 banks and financial institutions, 1000 SMEs, as well as 150 large corporate clients.
This acquisition will expand EbixCash Financial Exchange’s footprint from its existing 231,500 physical distribution outlets, furthering the omni-channel strategy of the company.
Also, CDL’s corporate business is highly synergistic with EbixCash’s existing corporate business, as it now provides EbixCash with the ability to sell Digital Forex and multicurrency cards etc to its existing corporate clients.
Ebix intends to fund the entire transaction in cash, using its existing bank line and internal cash reserves, though it retains the option at its sole discretion of paying up to $60 million in Ebix stock priced based on the average share price.
According to the release, CDL had revenues of $37 million and EBITDA margins of approximately 25 percent. Ebix believes the business can continue to grow at the rate of 20 percent plus annually, with operating margins of 30 percent or more, once fully integrated.
Speaking further on the announcement, Ebix Chairman, President and CEO Robin Raina said,
“The acquisition of CDL provides us with new abilities in niche financial exchange sectors while expanding our footprint in India and establishing our EbixCash Financial Exchange as the largest Financial exchange in the country. We have been eager to build a strong footprint in India’s airports and shipping ports, as their high levels of customer traffic provide recurring sources of revenue and income for any Financial Exchange.”
At present Ebix’s Indian arm, EbixCash sees domestic remittance volumes of approximately $100 million per month.
It also processes approximately six lakh transactions per day and approximately $2 billion in annual payment volume.