Anand Rathi Wealth IPO: All You Need To Know
Anand Rathi Wealth's IPO will open on Dec. 2 and close on Dec. 6.
Anand Rathi Wealth Ltd. will launch its three-day initial public offering on Thursday to allow partial exit to its promoter shareholders and investors during a boom year for Indian firms looking to list on the bourses.
The IPO by the wealth management firm, which managed money of high net worth individuals with assets worth Rs 5-50 crore, is a pure offer for sale, according to its red herring prospectus.
The maiden offer constitutes 28.83% of the post-issue share capital of the company, with promoters holding 48.8% after the sale.
Issue Details
Issue Date: Dec. 2-6.
Offer for sale: Rs 660 crore.
Price band: Rs 530-550 apiece.
Market value at the upper end of the price band: Rs 2,288.9 crore.
Face value: Rs 5 apiece.
Lot size: 27 shares and multiples.
Listing: NSE and BSE.
Lead managers: Equirus Capital, BNP Paribas, IIFL Securities
The company undertook a preferential allotment to its senior management Feroze Azeez in October 2020 at an ex-bonus price of Rs 274 apiece. The issue is priced at twice the preferential issue price of Rs 550 apiece. The company is valued at Rs 2,288.9 crore at the upper end of the price band.
Where Will The Money Go?
The money raised from the IPO will go to the promoters and selling shareholders. It will not come to the company.
The firm generates enough free cash float for its operations, Amit Rathi, non-executive director at Anand Rathi Wealth, told BloombergQuint in an interview.
Business
Anand Rathi Wealth is into distribution of mutual fund products to clients and structured products, including market-linked debentures to high net worth investors.
The company had 6,564 clients as on Aug. 31, 2021. All of them, it said, are long-term clients with an outlook of five to 10 years. Total assets under management of all its clients stood at Rs 30,209 crore as of August.
It earns 33-34% of its revenue from sale of mutual fund products. The firm gets trail commissions for sale of mutual funds from asset managers. Over the last two years, revenue from mutual funds have declined due to a change in regulation that require commissions to be paid out of the scheme instead of the fund house or trustee.
The remaining revenue of 63.2-59.2% is received from sale of structured products such as debentures and market-linked debentures that it buys from the market intermediaries and sells to clients.
Financials
Anand Rathi Wealth has provided financials for the last three fiscals. It also released results for the five months ended August but no year-on-year comparison.
The company expects to maintain an Ebitda margin of more than 40-42%. The expansion in margin, it said, is attributed to the 233 relationship managers — 152 of whom have more than a three-year track record with the company.
Peers
The only listed peer is IIFL Wealth Management Ltd.
Risks
The continuing effect of the Covid-19 pandemic on business and operations is highly uncertain and cannot be predicted.
Revenue from distribution and sale of financial products are dependent on sustained ability to increase assets under management as well as on the performance of the funds that it distributes. Any changes in the total expense ratio due to regulatory changes may reduce distribution commission income, affecting business.
Anand Rathi Commodities Ltd., one of its promoter group entities, and its directors, on account of being a commodity broker with National Spot Exchange Ltd., are involved in a proceedings involved with the Securities and Exchange Board of India and the Economic Offences Wing of the Mumbai Police.
Distribution arrangement with asset management companies can be terminated without notice, or due to failure to comply/perform.
Subject to a variety of financial services regulation in the jurisdictions where it operates.