Zaggle Prepaid makes stock market debut, shares list at 2.9% premium

Zaggle Prepaid Ocean Services, a SaaS and fintech company, made its stock market debut on Friday, with shares listing at a 2.9% premium over its initial public offering (IPO) price of ₹164 ($1 = ₹82.96). The company's shares opened at ₹168, and market experts are forecasting a potential increase of up to 9% in the listing gains.

The IPO had been well-received by investors, with subscriptions reaching 12.5 times the shares on offer. The qualified institutional buyer (QIB) portion was oversubscribed 16.73 times, while the non-institutional investor portion was subscribed 8.8 times. The retail portion saw subscriptions at a rate of 5.9 times.

The public offering consisted of a fresh issue of equity shares amounting to ₹392 crore (Rs 1 crore = $120,545) and an offer for sale of up to 10,449,816 shares by selling shareholders. The price band was set between ₹156 and ₹164 per equity share. Prior to the IPO, Zaggle raised ₹253.52 crore from anchor investors including Kotak Equity Opportunities Fund, ICICI Prudential Technology Fund, and Eastspring Investments India Fund.

Zaggle intends to use the net proceeds from the IPO for various purposes including customer acquisition and retention, technology development, repayment or prepayment of certain borrowings, and other general corporate purposes.

Despite challenges in fiscal year 2023 where profits declined by 45% compared to the previous year and negative operating cash flows of ₹15.6 crore were reported primarily due to an increase in trade receivables of ₹58 crore; Zaggle's revenues have been steadily increasing. This growth has been driven by an expanding user base and increased spending by those users, as well as an increase in program fees resulting from an overall expansion in business scale.

Operating in the B2B2C segment, Zaggle interfaces with both businesses and end users. Since its establishment in 2011, the company has become a prominent player in spend management. As of March 31, 2023, it has issued more than 50 million prepaid cards in collaboration with banks and served over 2.27 million users. Its diverse offerings range from fintech products and services to a suite of SaaS solutions including tax and payroll software. The company's market capitalization stands at ₹2,028 crore as per the Bombay Stock Exchange.

The stock market opened in the red on the day of Zaggle's debut, following two consecutive sessions of declines. As of 10:00 am, the Sensex was down by 178 points and Nifty by 64 points.

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