Atlanta-based Ebix Inc. just made its biggest acquisition yet in a buying spree aimed at making the company’s Indian subsidiary into the top provider of exchanges for foreign currency and travel services.
EbixCash announced in July the all-stock deal to acquire Yatra Online Inc. which operates one of India’s largest travel marketplaces at Yatra.com. Ebix paid the equivalent of $337.8 million, which Yatra later clarified would amount to about $239 million in total equity after debt, outstanding warrants and other liabilities were factored in.
The move is the latest growth play in a year that has already seen Nasdaq-listed Ebix spend $100 million in its bid to consolidate services in India’s fragmented travel and forex market.
The biggest buy to date in 2019 so far has been EbixCash’s $77 million purchase of Weizmann, its rival in the Indian remittance sector, but that’s just one in a long string of acquisitions totaling about a billion dollars since Ebix began targeting Indian consumers with the $120 million purchase of prepaid card provider ItzCash in 2017.
In just three years, Ebix has nabbed enough foreign exchange and money-transfer operators to make EbixCash the largest inward remittance exchange operator and has given it 75 percent share of foreign exchange activity at India’s airports.
Ebix, which in the U.S. provides software and exchanges for the insurance and health care sectors, has also gone deep in corporate travel in Asia. It owns Asian platforms including Via, Mercury and now, Yatra. Recent acquisitions in India also include freight truck booking platform Routier, taxi service Aha, back-end travel portal operator Zillious. The company also aims to buy Trimax, the leading bus exchange, out of bankruptcy this year, according to its second quarter report.
CEO Robin Raina has said EbixCash could be eventually be a $500 million business in India on its own, and the unit is preparing for its own initial public offering on Indian stock exchanges by the second quarter of 2020.
Mr. Raina sees EbixCash as the agent to consolidate a fragmented travel market in India and around Asia, cross-selling products and services across its holdings while maintaining its grip on the back-end technology that underpins the marketplaces.
Already the company owns the top travel exchanges in places like the Philippines and Indonesia. Ebix is reportedly in the running to buy Cox and Kings, an established Indian travel brand with an extensive brick-and-mortar presence. (That company also processes visas for the Indian Consulate General in Atlanta.)
Travelers now must navigate too many platforms to get the services they need, Mr. Raina said in a recent interview with a CNN affiliate in India.
“We are bringing a new paradigm shift in terms of thinking in the Indian market, in the financial exchange market,” Mr. Raina said in the interview. “What has been happening in India is that every player is trying to find their own niche and operate in a particular sector,” like buses, trains, planes, remittances, exchange, travel insurance, health insurance and more. “Ebix’s intent is to create an end-to-end market.”
Mumbai-based EbixCash has grown beyond a simple payment card issuer and foreign exchange counter operating at 32 international airports in India.
It’s now a bona fide payments player, providing remittance services, digital lending and insurance products, as well as issuing prepaid debit cards and helping corporations manage loyalty programs. The company even offers point-of-sale terminals allowing retailers to accept electronic payments. EbixCash claims 360,000 physical outlets across Asia to complement its digital back end, including 75,000 in 3,000 Indian cities.
Strong growth from EbixCash, which now makes up more than half of Ebix’s revenue, drove 16 percent revenue growth for the company to $144.3 million in the second quarter of 2019 over the same period last year. EbixCash saw its exchange revenues jump 43 percent from $55 million to about $79 million during the quarter. Annual revenues for Ebix Inc. last year hit about $500 million, a record figure.
On its way to a more than $1.2 billion market capitalization at the current stock price of around $40, Ebix has weathered its share of investigations by regulatory authorities.
The company in 2014 settled a class-action suit brought by shareholders alleging insufficient transparency into its financial practices. The company paid $6.5 million while maintaining that it had engaged in no wrongdoing.
The company’s stock value dropped by 20 percent in one day last year when it switched auditors to an Indian accounting firm, prompting an Atlanta Journal-Constitution investigation into the sale of about $1 million in shares by one of its largest investors, the Liechtenstein-based Rennes Foundation, just before the stock plummeted.
Viceroy Research, which investigates publicly traded companies, has also called into question Ebix’s accounting practices, as well as the operations of a charity run by Mr. Raina, the Ebix CEO. Viceroy alleged exaggerated donation claims around Mr. Raina’s home-building efforts in India’s slums through the Alpharetta-based Robin Raina Foundation.
Despite the controversy, many brokerages are now recommending purchasing or holding Ebix’s shares, the value of which has halved since peaking at more than $80 per share last September.
