Listed New Delhi-based security services provider Security and Intelligence Services (SISNSE -1.74 %) is close to picking up 60 per cent in a Singapore company for about Rs 350 crore, two persons with direct knowledge of the matter said.
“The deal will happen in two tranches, and in the first tranche, SIS would pick up around 60 per cent stake. The remaining stake would be bought based on certain conditions that both the buyer and seller have to fulfill,” said one of the sources.
ET could not independently verify the name of the Singapore company. However, another person close to the development said the target company was one of the top four security management players in Singapore. SIS did not respond to the ET’s request seeking comment.
This would be the fourth acquisition for SIS in the current financial year. In November, SIS acquired majority stake in Bengaluru-based Uniq Detective and Security Services for about Rs 200 crore. The Singapore-based company would be its first such deal outside India.
“The Singapore company is mainly into providing security to public transport, business towers and condos and has double-digit EBIDTA (earnings before interest, tax, depreciation and amortisation) margins,” which are extremely healthy,” said one source.
In Singapore, most security management companies abide by a grade-based licence system where past performance decides the size of contracts they qualify to bid for. The top five players have the best ratings and are able to participate in all the major biddings, helping them maintain high profit margins.
The acquisition is set to push SIS’s EBITDA up a notch as well, the persons who spoke to ET said. One of them said the buy could make SIS a billion dollar revenue company.
SIS went public in 2017 and has said it was looking to grow both organically and inorganically. SIS raised Rs 1,000 crore through pre-IPO, IPO placement and via funding from an Australian bank for non-organic growth through mergers and acquisitions in 2017. The company had said the funds would be used towards acquisitions and expansion across India.
Source: Economic Times