Maveric Systems, an Indian banking technology provider, is weighing a potential domestic listing or private capital raise, with the decision hinging on the progress of an ongoing business transformation, said CEO and Whole Time Director Ranga Reddy.

The Chennai-based company will firm up its decision towards the end of the year, Reddy told Mergermarket in an interview on 17 February.

“We are considering both, and preparations are on for both,” said the CEO, adding that it is already engaging with a shortlist of investment banks, although a mandate is not firm yet.

Maveric still has about USD 20m in its reserves to carry on its operations but reckons it will need USD 60m to USD 90m more in about nine to 12 months to meet its existing investment and growth needs. Of the total amount, Maveric could raise about USD 60m from equity investors – a “prudent” move to limit dilution – and the remaining from debt, added Reddy.

An India IPO would be the first option to raise equity, with Maveric intending to float a stake of about 20% to 30%, said Reddy. However, the decision to launch an IPO hinges on Maveric’s growth and transformation trajectory. Reddy explained that over the past 12 months, the company’s focus has been on revalidating services that are in demand amid a changing banking technology landscape.

This meant taking a hard look at Maveric’s five main service lines: customer experience, regulatory, new age application management services (AMS), assurance, and operations and technology (ONT) transformation. When factoring in how artificial intelligence is impacting all these segments, the company decided to make the ONT service line as its flagship – driven by the application of AI on banking operations, enabling compliance with regulations, maintaining customer experience and helping with profitability management.

“We are trying to pivot the company over the next 18 months to be an AI-led operations and technology transformation leader,” added Reddy.

Depending on how the transformation goes, Maveric may go through an intermediary stage of raising funds from a venture capital firm and other investors before looking at a listing, said Reddy.

Maveric, which is majority controlled by four promotors including Reddy, receives pitches from potential buyers fairly frequently but it has not engaged with them actively given the company is focused on following its transformation path and growth trajectory, said Reddy.

US expansion plans 

In the run up to the potential listing, Maveric is working to expand its footprint in the US through “competency acquisitions”, with a focus on targets in the data and regulatory space.

It has given Sett & Lucas a buy-side mandate and has been working with the advisor for the past eight months to identify targets in the US, said Reddy.

Conversations with targets are ongoing, with Maveric hoping to close two acquisitions in the first half of the new financial year beginning in April 2025. It is looking to spend a total of about USD 40m on the deals, he added, saying it has had more success engaging with targets in the data space over the regulatory sector.

Founded in 2000 and funded entirely through internal resources and accruals, Maveric has a number of banking clients across India, the UK, Europe and the Middle East, but only a few in the US, which is why it is keen to expand its footprint there. It also has partnerships with consulting firms and IT companies to grow its reach further in the US, added Reddy.

“We have sufficient revenues from the US, but there is a large degree of client concentration, so we would like to expand our client footprint,” he said.

Next on the cards is India, where Maveric wants to acquire a firm in the data, AI, or regulatory space for a ticket size of about USD 5m to USD 15m. It plans to mandate a boutique advisor by end-March or April, said the CEO.

For the year ending 31 March 2024, Maveric recorded a turnover of about INR 5bn (USD 57.5m), according to a disclosure on its website.

Some 80% of Maveric’s revenues come from 20% of its customers, but it is looking to grow its client base, said Reddy. Over the next 24 months, the tech provider’s sales team is targeting to actively engage with four of the world’s top 10 global banks and converting two into clients. It is also targeting 12 regional leaders – particularly in the US, the UK and Europe – and convert at least six of them, and will focus on select regulatory and wealth management-focused fintech firms in the UK and the US, said Reddy.

The firm groups its banking customers into three categories: early adopters of AI; those that are committed but still experimenting with AI; and those applying AI at scale.

Reddy explained that Maveric has positioned itself to serve the third group of clients and has established an internal framework called AI at scale. The framework has three key features: it adopts a platform led approach; focuses on how data is organised and made available to AI; and uses a marketplace-style approach to tap into both in-house AI solutions as well as adopting solutions available in the market.