Findi Limited (ASX:FND) Chairman Nicholas Smedley discusses the details that its Indian subsidiary TSI has successfully raised $37.6m via a placement to leading Investment group, Piramal Alternatives.Paul Sanger: I am Paul Sanger for the Finance News Network. And today I'm talking with Findi Limited,
(ASX:FND), and they have a market cap of around $40m. Findi provides bespoke payment services for one of the world's largest developing markets while being part of the digital banking revolution where we have banking without banks, payments without cards, and customers able to transact in a fast and flexible way from any location. We welcome back Findi Chairman Nicholas Smedley. Nicholas, many thanks for your time today.
Nicholas Smedley:Thank you very much.
Paul Sanger:So, Nicholas, the company has just announced that your Indian subsidiary, TSI India, has successfully raised $37.6 million via placement of Convertible Debentures that are compulsorily convertible to equity at IPO. This is a material announcement for the company. Can you tell us about the transaction and some of the counterparties involved, please?
Nicholas Smedley:Yeah. No, it's a significant milestone for us, it really sets us up to deliver on our medium-term growth objective for both inorganic and organic expansion, in both the digital payments and ATM network in India. The Piramal, who has conducted almost six months of due diligence on us, is one of a large investment house in India, their parent company has over US$10 billion in net assets. The Alternatives Fund that invested in us has US$1.5 billion under management. And most importantly, the specific fund that invested in us is also backed by one of Canada's largest pension funds, which has about $440 billion under management. So great endorsement from institutional grade investors.
Paul Sanger:And how was the equity valuation determined ahead of the capital raising?
Nicholas Smedley:Was based on effectively a 10 times multiple on last year's earnings, which derived a number of $150-odd million, pre-IPO, pre-money. And $190 million post-money. And if you would like to do the Indian conversion, that's 813 crore, is what the valuation was determined as.
Paul Sanger:And once listed, what would be the anticipated percentage holding of the parent Findi in TSI?
Nicholas Smedley:Yeah. So as it stands at the moment, with the cap table and commitments that we have, about 16.7% is the effective conversion amount for equity holding for Piramal at IPO.
Paul Sanger:And how will the funds be used going forward?
Nicholas Smedley:Yeah. We'll be using these funds to basically give us a significant balance sheet to enable us to look at other contracts for brown label ATM, accelerate our white label ATM deployment once we receive that license, which we're expecting before Christmas. And then there are also other acquisition targets in both the digital space and the white label ATM space that are logical for us with this war chest.
Paul Sanger:And, Nicholas, to finish up, would I be correct in saying that Findi is the only ASX company that has direct exposure to India?
Nicholas Smedley:Yes. As far as we're aware, Findi is the only 100% pure play Indian exposure for the financial services market in Australia. So if Australian investors want exposure to India, they need to go through Findi.
Paul Sanger:Nicholas, there seems to be a massive discrepancy between what an entity in India just paid for an ownership share in TSI versus where your stock is currently trading on the ASX. Would you agree with that?
Nicholas Smedley:I'd agree with that wholeheartedly. Just recently, Red Leaf Securities last week actually put out a broker research report on Findi Limited, and they had a price target of $3.61. So you can see that it's starting to be valued at more appropriate levels. But the share price now, there's a big disconnect, it's a four to one compared to the price that Piramal paid at the moment. And obviously we see more growth ahead.
Paul Sanger:Nicholas Smedley, many thanks for your time today.
Nicholas Smedley:Thank you very much.
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