Axis Bank in talks to sell Mswipe stake

Mumbai: Private sector lender Axis Bank Ltd is looking to sell its approximately 8% stake in Mswipe Technologies Pvt. Ltd, a mobile payments services provider, two people aware of the development said.

“The bank wants to sell its entire stake in the payments terminal company Mswipe and they have initiated discussions on the same. They are talking to some of the existing investors of the company, too, to pick the stake from them,” said one of the two people cited above, requesting anonymity, as the talks are private.

According to the second person cited above, the bank is looking to sell its stake at a price that would value Mswipe at $200-250 million.

“Around the last time they raised funds, the company was valued at close to $150 million. The price which they are seeking could get them up to $20 million for their stake,” he said.

The last fund-raising at Mswipe was in July 2015, when the company raised Rs160 crore in a Series C round from new investors such as Falcon Edge Capital, Ola Cabs and Meru Capital.

Existing investors Matrix Partners India, Axis Bank Ltd and DSG Consumer Partners also participated in the funding round.

Axis Bank first invested in the company in early 2013.

Emails sent to Axis Bank and Mswipe on Friday went unanswered.

Mswipe was founded in 2012 by Manish Patel, a doctor by education, who previously co-founded an alcoholic beverages distribution company called Milestone Merchandise. Mswipe provides a mobile payment solution with a card reader, which can be attached to any mobile phone’s audio (headset) jack. The company also provides similar card payment solutions for smartphones.

It works closely with smaller banks such as Corporation Bank, RBL Bank Ltd, Shamrao Vithal Co-op. Bank and large banks such as Axis Bank.

It is also present in the Middle East, the US and South-East Asia through partnerships. Its clients include small and medium enterprises.

In the payments services market, Mswipe competes with companies such as Ezetap and Paynear.

In August 2015, Ezetap raised Rs150 crore from Social+Capital, Helion Advisors and Berggruen Holdings, Horizons Ventures and the Capricorn Investment Group.

In December 2015, Paynear raised around Rs16 crore from a high net-worth individual investor.

According to a March 2015 report by Ken Research, the payment services industry grew at a compound annual growth rate of 147.6% between the financial years 2012 and 2014.

The research firm believes that the Indian payments market will continue to grow at a strong rate going ahead. The payments market is driven largely by transactions through mobile point of sale terminals and mobile banking, the report said.

For Axis Bank, plans to sell its stake in Mswipe come at a time when the bank is facing stress due to loans that soured.

In the quarter to September, the private sector bank reported a 83% plunge in net profit at Rs319 crore, primarily on account of higher provisioning for bad loans.

The bank had posted a net profit of Rs1,915.64 crore in the same period in 2015-16.

Gross non-performing assets (NPA) and net NPAs at the bank rose to 4.17% and 2.02%, respectively in the quarter.