New Delhi: The first strategic foreign investment in the country's cash management space has been sealed with the regulatory clearance for a joint venture between Spanish multinational Prosegur and Delhi-based Security and Intelligence Services (India).
The Foreign Investment Promotion Board, the nodal body that clears FDI into India, cleared the proposal last week allowing one of the world's largest private security companies to enter India. Prosegur will invest around 100 crore for a 49% stake in the newly-launched local entity, in which the Indian partner will hold 51%.
The joint venture will offer cash management solutions to Indian banks, financial institutions and organised retail firms.
"The idea is to build world-class cash processing infrastructure and technology for productivity enhancement and superior risk management," said Rituraj Sinha, chief operating officer at SIS. Prosegur will bring in expertise from its global portfolio which includes over 600 offices across the world.
Cash management support system is vital especially to banks as services such as secured transportation of cash and maintenance solutions for ATMs are often outsourced to third-party entities.
The joint venture in India will offer its services to banks, including SBI, HDFC, Bank of Baroda, Punjab National Bank and ICICI. Over the next two years, the firm plans to invest over 80 crore, a part of which will be used to facilitate inorganic growth. "We will actively pursue acquisitions as we want to achieve a 30% market share in the cash management space by 2015," said Sinha.
India's security services sector has been witnessing hectic activity in the M&A space over the past few years. Some of the deals in the past include G4S's acquisition of DLF's security firm TerraForce and Goldman Sachs-owned International Service System buyout of Chennai-based SDP Cisco. Last year, Blackstone acquired the cash management arm of APS group - Securitrans India.
Founded by first-generation entrepreneur Ravindra Kishore Sinha in 1974, SIS' services include man guarding, electronic security, security training and consulting, among others.
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