Nonbank ATM installer gets P109M in equity

The Philippines’ first nonbank automated teller machine (ATM) deployer Electronic Network Cash Tellers (Encash) has sold 40 percent in new equity to foreign strategic investors, raising fresh funds to scale up a nationwide network targeted to breach the 1,000-ATM mark in five years’ time.

Encash chief executive officer Eric Severino told the Inquirer that his company recently raised $2.57 million (P109 million based on Friday’s foreign exchange close of P42.59:$1) in a private equity deal with two foreign funds—Rural Impulse Fund II S.A. and responsAbility Ventures I Services AG. The capital infusion is seen cementing Encash’s position as the biggest affiliate switch network in the country.

Rural Impulse Fund is a fund managed by Belgium-based Incofin Investment Management and responsAbility Ventures I Services AG is managed by Switzerland-based responsAbility Social Investments AG for collective investments schemes, Severino said. The two funds invested equally in the private equity deal, each getting a 20-percent interest in Encash, he added.

“We are very pleased to partner with Incofin and responsAbility and appreciate the support and commitment shown by them in Encash. The funds infused by the investors will enable us to expand and serve more rural Filipinos,” Severino said.

“They (new investors) felt that the Encash strategy was closely aligned with their goals,” Severino added.

Encash teams up with financial institutions especially in the countryside to put up ATMs in remote areas where big banks do not want to set up their own ATMs. In a country where most commercial transactions are still paid in cash rather than credit or debit cards, this fee-based business is seen viable even in areas shunned by banks.

Asked how far the equity will go into expanding its network, Severino said Encash would like to deploy at least 100 ATMs this year although the medium-term goal would be to hit 1,000 by 2017. “At 500 ATM level, our business will grow organically,” he said.

Encash had 337 ATMs as of end-January, making it the fastest-growing ATM network in the Philippines. This capital infusion also brings to P200 million its paid-up capital, double that of ATM consortium Megalink and closely tracking BancNet’s P300-million capital base, Severino noted.