Zaggle Prepaid Ocean Services, a fintech company that provides spend management solutions, has announced that its initial public offering (IPO) will open for subscription on September 14 and close on September 18. The company has fixed the price band of the IPO at ₹156-₹164 per equity share.
The IPO consists of two parts:
- a fresh issue of equity shares worth ₹392 crore
- and an offer for sale (OFS) of up to 10.4 million shares by the promoters and existing investors.
The minimum bid lot is 90 shares and in multiples of 90 shares thereafter.
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 intends to use the net proceeds from the fresh issue for customer acquisition and retention, technology development, repayment or prepayment of certain borrowings, and general corporate purposes.
The book running lead managers for the IPO are ICICI Securities, Equirus Capital, IIFL Securities and JM Financial.
About Zaggle Prepaid Ocean Services
Zaggle Prepaid Ocean Services was incorporated in 2011 and operates in the B2B2C segment. It offers fintech products and services, such as prepaid cards, expense management, rewards and recognition, and payroll software, to corporates and their employees.
The company claims to have issued more than 50 million prepaid cards in partnership with banks and served more than 2.2 million users as of March 31, 2023. It has over 1,800 customers across various sectors, such as banking and finance, technology, healthcare, manufacturing, FMCG, infrastructure, and automobile.
According to Frost & Sullivan, the market size for spend management software and services in India was estimated to be around ₹5,000 crore in fiscal 2021 and is expected to surpass ₹20,000 crore by fiscal 2027. The company says it has no direct competitors in India or abroad.
Financials of Zaggle
Its profits in FY23 fell by 45%, as compared to the year before i.e. FY22. The company also reported negative operating cash flows of ₹15.6 crore in fiscal 2023 due to an increase in trade receivables of ₹58 crore.
| PARTICULARS | FY23 (CONSOL) | FY22 (STANDALONE) | FY21 (STANDALONE) |
| Revenues | ₹554 crore | ₹371 crore | ₹240 crore |
| PAT | ₹22.9 crore | ₹41.9 crore | ₹19.3 crore |
Risks associated with Zaggle
In its risk factors, the company said that it operates in a highly competitive industry and may face competition from existing or new players who offer similar or alternative solutions. It also said that it may experience significant fluctuations in its financial performance due to various factors, such as customer retention rate, usage expansion, product acceptance, pricing strategy, regulatory changes, technological disruptions, and cyberattacks.
Furthermore, it’s possible that its marketing initiatives won’t be profitable in luring in more clients. The RBI oversees the operations of its banking partners, thus any changes to the RBI’s policies, decisions, or regulatory framework might have a negative impact.Its ambitions to expand internationally might fail, exposing it to risky managerial, legal, tax, competitive, and economic scenarios.