5Paisa Capital Becomes India’s First Listed Online Broking Firm
5Paisa Capital made a rather odd stock market debut.
5Paisa Capital Ltd. is the first online broking firm to debut on India’s bourses. But that’s not the only reason it grabbed attention on its debut day.
Oddly, the company’s shares listed at vastly different prices on the two stock exchanges.
The stock debuted at Rs 400 apiece on the National Stock Exchange. It was locked in lower circuit after it dropped 5 percent to Rs 380 thereafter. On the Bombay Stock Exchange the scrip listed at Rs 650 apiece and saw an intraday low of Rs 617.50.
Just 247 shares were traded through the day on the BSE whereas traded volume on the NSE hit 30,000 shares.
"The difference in prices of both the exchanges will stay until SEBI intervenes. The law does not permit the exchanges to change the price" said Deena Mehta, well known broker and managing director of Asit C Mehta investments.
5Paisa Capital was hived off from financial services provider IIFL Holdings Ltd. last year. IIFL investors received 25 shares of 5Paisa for every share held. The shareholding pattern mirrors that of its parent. The company is 35.48 percent owned by Canada-based billionaire Prem Watsa’s Fairfax Group and 29 percent by Nirmal Jain-led promoter group, according to its statement.
5Paisa is a brokerage that sells stocks, derivatives, mutual funds, alternative investment funds, bonds and debentures, insurance and personal loans. It competes with top discount brokers like Zerodha, RKSV, Samco Sec, SAS online, Trade Smart Online and policbazaar.com.
“More than 60 percent of our clients come from tier 3, tier 4 and smaller towns and millennials form a large part of the customer base considering we are mobile-first and 100 percent online,” Prakarsh Gagdani, chief executive officer at 5Paisa Capital, told BloombergQuint.
The 18-month-old company received Rs 100 crore from the parent as part of the scheme of arrangement. It has a daily equity turnover of Rs 3,000 crore, aided by its Rs 10 flat brokerage fee per order, the company said in an emailed statement. Besides discount broking, 5Paisa is growing its mutual fund business and targets Rs 100 crore assets under management in next 12-15 months, it said.
The company’s revenue stood at Rs 33.32 crore for the quarter ended September. It reported a net loss of Rs 54.98 crore as employee and administration costs rose.