Ebix Inc faces bankruptcy: Will its IPO-bound Indian entity, EbixCash, be affected?

Robin Raina-led financial technology firm Ebix Inc. has filed for bankruptcy in a North Texas court after defaulting on a loan. The bankruptcy filing will have far-reaching implications for its Indian entity, which has filed for IPO in the Indian market. However, Robin Raina, Chairman, President and Chief Executive Officer of Ebix, Inc., did not respond to BT's query on the impact on Indian business.

Also read: Zee-Sony merger: Analysts say new entity may get listed by April 2024

Let's examine the relationship between the Indian entity EbixCash Limited and the US-listed Ebix Inc.

Ebix Inc. is a holding company listed on the NASDAQ stock exchange. It does not have any promoter or person in control with substantial equity. The major shareholders include Raina, Blackrock, and Vanguard Group, among others, with Robin Raina holding the position of Chairman, President & CEO.

The Indian entity is a step-down subsidiary of Ebix Inc. Ebix Inc. has a wholly-owned subsidiary, Ebix Singapore Pte. This Singapore-based subsidiary holds a 100 percent stake in the Indian company, making it a step-down subsidiary of Ebix Inc. It is likely that the direct subsidiary, Ebix Singapore, will get mired in the bankruptcy proceedings. 

Brands like Ebix and EbixCash are owned by Ebix, Inc. The brands are used by EbixCash India, especially Ebix and EbixCash. Post-bankruptcy proceedings, the use of these brands will be impacted, and there could be new arrangements in case of any restructuring of the global parent's business.

The Indian entity, EbixCash Limited, doesn't have any debt in India. However, it took a loan from the parent company to acquire companies in India. Raina acquired over two dozen companies in payments, travel, forex, and remittances to create an 'airport' of financial transactions in India. The Indian entity was planning to repay $350 million from the IPO proceeds.

Also read: Vedanta approves second interim dividend for FY24; check details