Mumbai-based Topsgrup, the country's second-largest security solutions provider, is looking at two acquisitions to boost its market share from 13.2 per cent to 24 per cent. The Rs 2,500-crore (Rs 25-billion) organised Indian security industry, termed a sunrise industry, is dominated by multinational player Group 4 Securicor with a 25 per cent market share.
"We have zeroed in on two companies down south: One in the electronic security systems space and the other in manned guarding services. The total cost of acquisition would be Rs 100 crore (Rs 1 billion), that will be fully funded through internal accruals. We expect to seal the deals in the next six months," Diwan Rahul Nanda, chairman and managing director, Topsgrup, said.
The 37-year-old company closed the last financial year with revenues of Rs 330 crore (Rs 3.3 billion). It foresees its top line touching Rs 600 crore (Rs 6 billion) and manpower crossing 1,00,000, through both organic and inorganic means, in this fiscal.
On Monday, the company announced the acquisition of Bangalore-based Guardwell Detective Services, a premier security brand in south India, for Rs 20 crore (Rs 200 million) in an all-cash deal. The acquisition will add 5,000 security personnel to Topsgrup's fold.
This will take the total strength to 70,000.
Topsgrup is also on the verge of acquiring companies abroad in areas of air rescue, manned guarding, closed protection and electronic security. The company is looking at acquiring a US-based company for $300 million (Rs 1,200 crore) within a year.
It will also tap markets in South Africa and Australia, Nanda said. It recently closed a buyout deal in the UK for $140 million (about Rs 560 crore), marking its foray into the global security services market that is set to surpass $230 billion by 2015.
"Currently, our market valuation is Rs 1,000 crore (Rs 10 billion). We expect a four times higher valuation this year. We are planning to raise funds through private equity placement to finance our overseas acquisitions," he said.
A part of these funds would be utilised to expand our Topsline 1252 emergency service, currently available only in Mumbai, to Hyderabad, Delhi, Bangalore and Kolkata this year," he said. Nanda refused to divulge the quantum of equity the group plans to dilute.
The Nanda family holds around 69 per cent equity of Topsgrup, while the rest is held by ICICI Venture, Indivision, the investment of arm of the Future Group, and ace investor Rakesh Jhunjhunwala.
"We will be going in for an initial public offer in a year or two to provide an exit route to our existing investors," Nanda said, adding the company envisages to become a $1-billion (Rs 4,000 crore) company by then.