EbixCash's IPO filing doesn't disclose an adverse court order

EbixCash Ltd, payment services company that plans to go public, is yet to disclose in its draft share sale documents an adverse arbitration order passed by a Singapore court in June that could cost it ₹100-200 crore.

- Arti Singh

The firm, a unit of Nasdaq-listed Ebix Inc., received the markets regulator’s approval for a ₹6,000 crore IPO in April.

EbixCash purchased gift card provider ITZCash in 2017 and rebranded it to Ebix Payment Services (EPS), which now forms a big chunk of its business. Vyoman Tradelink Ltd—the original promoter of ITZCash—continues to hold a 20% stake in the business and took Ebix to an arbitration court in 2019 over its failure to make some earn-out payments.

According to a person close with the matter, the Singapore International Arbitration Centre (SIAC) ordered Ebix to buy the remaining 20% from Vyoman and issued a penalty, a development the firm has not disclosed yet as it heads for an IPO.

“On 1 June 2023, SIAC ordered Ebix to buy the remaining 20% from the original promoters," the person said on condition of anonymity. SIAC asked Ebix to purchase the stake at a valuation finalized by an independent valuer. The valuation process is ongoing, but the purchase could cost EbixCash ₹100-200 crore, the person said.

In a separate order, SIAC also asked Ebix to pay $1 million in cost awards to Vyoman within 30 days, plus interest in case of delay.

Vyoman moved SIAC, accusing Ebix of breaching the ITZCash share purchase agreement (SPA) and shareholders’ agreement (SHA), and sought their termination. Vyoman claims EbixCash was supposed to make certain earn-out payments that would have totalled ₹250-300 crore, linked to revenue targets achieved by EPS by the end of FY20; however, revenues stayed flat and then fell over the period, only to shoot up after the earn-out period.

SIAC asked Ebix to buy the residual 20% but did not favour Vyoman’s demand for the earn-outs. “Ebix had no plan to buy this 20%, and this would have become ‘dead stock’ for the promoters; that’s when Vyoman decided to take the matter to arbitration," the person added.