Prudent Corporate Advisory IPO opens; check price band, issue size, financials

The initial public offering (IPO) of retail wealth management services firm Prudent Corporate Advisory Services Ltd has come up with its initial public offering (IPO) today i.e. May 10 and will close on May 12. The mutual fund distributor aims to raise ₹538.61 crore with the issue, which is an offer for the sale of up to 85,49,340 shares. The price band for the public issue has been fixed at ₹595- ₹630.

The company has so far received bids for 6,69,415 shares of total 60,18,689 shares open for bidding. The anchor portion, in which 21 investors participated, has been subscribed 82.95%. Total 20,99,240 equity shares of total 25,30,651 shares were allocated at a bid price of 630 apiece.

In its Draft Red Herring Prospectus filed before market regulator SEBI, the company says the objectives of the IPO offer are to carry out the offer for sale and achieve the benefits of listing the equity shares on the stock exchanges. The company will not receive any proceeds from the offer and all such proceeds will go to the selling shareholders.

One of the two investors Wagner Ltd, a company incorporated and registered in Mauritius, will sell 82,81,340 shares, while another investor Shirish Patel will sell up to 2,68,000 equity shares.

For the fiscal year ending March 31, 2022, Prudent Corporate Advisory Services' net tangible assets were ₹154.3 crore, while its net worth stood at ₹157.6 crore. The company's pre-tax operating profit stood at ₹537.91 crore. Wagner holds a 40% stake in Prudent Corporate, while Patel's shareholding is 3.15%.

The company is offering a ₹59 discount for eligible employees applying under the Employee Reservation Portion. Investors can bid for a minimum of 23 equity shares and in multiples thereof. The maximum subscription amount for retail investors has been fixed at ₹2 lakh, while it's ₹5 lakh for employees. QIBs can bid for 16,87,101 shares, while NIIS can bid for 12,65,326 shares. Retail investors can place their bids for 29,52,427 shares while employees’ quota has been fixed at 1,13,835.

Prudent Corporate was incorporated in 2003. It provides wealth management services to 13,51,274 unique retail investors through 23,262 MFDs and has footprints across 110 locations in 20 states of India. As of December 31, 2021, the company's assets under management from the mutual fund distribution business stood at ₹48,411.4 crore, with 92.14% being equity-oriented. Key metrics of its business verticles are mutual funds, insurance and broking. The company's contingent liabilities as of March 31, 2021, stand at ₹19.9 crore.

The company's AUM increased from ₹16,667 crore as on March 31, 2018 to ₹48,411.4 crore as of December 31, 2021, at a CAGR of 32.83%. Among national distributors, its market share on a commission received basis has increased from around 4% in fiscal 2015 to around 12% in fiscal 2021. the company's equity AUM of ₹44,605.9 crore as of December 31, 2021, represented 2.39% of the total equity AUM of the mutual fund industry.

The company also distributes life and general insurance products through our wholly-owned subsidiary, Gennext. In the nine months ended December 31, 2021, it distributed 74,037 policies across life and non-life insurance segments, with an aggregate premium of ₹161 crore, and total brokerage received amounting to ₹23 crore.

The financial distribution industry in India has grown rapidly. Between March 2021 and March 2026, the overall industry’s AUM is projected to sustain a high growth trajectory of 11-13% CAGR, reaching ₹57 lakh crore. Equirus Capital Private Limited, ICICI Securities Limited and Axis Capital Limited are the book running lead managers of the issue.