Anand Rathi Wealth Ltd, part of Mumbai-based financial services group Anand Rathi, on Wednesday said it has raised Rs 194 crore from anchor investors, ahead of its initial share-sale on Thursday.
The company has decided to allocate 35.25 lakh equity shares to 12 anchor investors at Rs 550 apiece, valuing the transaction size at Rs 194 crore, according to a BSE circular.
SBI Mutual Fund (MF), ICICI Prudential MF, Franklin Templeton MF, DSP MF, Kotak MF, Invesco MF, Canara Robeco MF, Nippon India MF, Abakkus, Quant MF, MK Cohesion, Rajasthan Global are among the investors that participated in the anchor book.
Out of the total allocation of 35.25 lakh equity shares, 31.58 lakh were allocated to mutual funds through schemes amounting to Rs 173.69 crore, which is 89.59 per cent of the total anchor book size.
The initial share-sale is entirely an offer for sale (OFS) of 1.2 crore equity shares by promoters and existing shareholders.
The OFS consists of the sale of 92.85 lakh equity shares by Anand Rathi Financial Services, and 3.75 lakh equity shares each by Anand Rathi, Pradeep Gupta, Amit Rathi, Priti Gupta, Supriya Rathi, Rawal Family Trust, and Feroze Azeez, and 90,000 equity shares by Jugal Mantri.
The issue includes a reservation of 2.5 lakh equity shares for employees.
The issue opens for public subscription on December 2 and will conclude on December 6. The price band for the issue has been fixed at Rs 530-550 apiece.
The public issue is expected to fetch Rs 660 crore at the upper end of the price band.
Half of the issue size has been reserved for qualified institutional buyers (QIBs), 15 per cent for non-institutional investors, while the 35 per cent has been set aside for retail investors.
Investors can bid for a minimum of 27 equity shares and in multiples of thereafter.
In the meantime, here is what brokerage houses are saying about the Anand Rathi IPO, according to the Moneycontrol report.
The brokerage house highlighted that the company’s business can get impacted by the volatility in securities markets, higher competition from existing and new players and the regulations from different financial bodies.
At valuations of 18.7x Apr-Aug 21 annualized earnings, Anand Rathi Wealth does offer some scope for upside on the listing, given -20 per cent earnings CAGR potential in the longer term combined with cross cycle ROE range of 20-30 per cent. The brokerage house has recommended subscribing to the issue.
Marwadi Financial Services
The company is dependent on Anand Rathi Global Finance Limited (ARGFL), one of the group companies, for its structured products business. Any adversities faced by ARGFL can severely impact the performance of the company.
“Considering the FY22 annualized EPS of Rs 29.46 on post issue basis, the company is going to list at a P/E of 18.67x with a market cap of Rs 2,289 crore, while its peer namely IIFL Wealth Management is trading at P/E of 24.59x (FY22 annualized),” said the brokerage while assigning a ‘subscribe’ rating to the issue.
Arihant Capital Markets Ltd
The company has strong fundamentals, healthy return ratios and has recorded strong AUM growth. However, the pricing of the IPO is a tad expensive compared to its peers.
It advises investors to subscribe for listing gains as the company has experienced negative cash flows in some prior periods and may do so in the future, which could have a material adverse effect on the business.