Mumbai-based firm, Anand Rathi Financial Services’ wealth management wing — Anand Rathi Wealth — filed a draft prospectus for an Initial Public Offering (IPO). This makes the firm second to IIFL Wealth, the only other listed pure wealth management company with a market capitalisation of ₹12,180 crore.
The who’s who of the IPO
The IPO itself will include up to ₹1.2 crore shares, a complete Offer for Sale (OFS) by current shareholders. The OFS will consist of 92.85 lakh equity shares held by Anand Rathi Financial Services, 90,000 shares held by Jugal Mantri, and 3.75 lakh equity shares each held by Pradeep Gupta, Priti Gupta, Amit Rathi, Anand Rathi, Supriya Rathi, Feroze Azeez, and the Rawal Family Trust. The sale of shares by the firm and promoters will raise capital between ₹800-900 crore. Post listing, Anand Rathi is expected to be the country’s top 10 RoEs with its current trend of 19.75.
The sales of shares itself will be split into — 92.9 lakh shares that will be sold by Anand Rathi Financial Services, and other promoters including Anand Rathi, Amit Rathi, Supriya Rathi, Pradeep Gupta, Priti Gupta and Feroze Azeez will sell 3.75 lakh shares each towards the IPO.
As of March 2021, Anand Rathi held 12.85% shares of the firm while Pradeep Gupta owned 5.48%. Anand Rathi Financial Services itself held 43.12% stake in the company.
The background
Anand Rathi Wealth has been a leading non-banking wealth solution firm in India. They have over 6000 active clients with 265 relationship managers, and the largest product team with 65 individuals operating across 11 cities that include major locations such as Dubai, Pune, Kolkata, Chennai, Bengaluru and Delhi. The company has two new-age, technology-first business verticals apart from the private wealth segment that includes digital wealth and omni financial advisors.
It has also been ranked among the top 3 non-banking mutual fund distributors by gross commissions in 2021. As of March 31, 2021, Anand Rathi Wealth’s private wealth vertical had ₹26,058 crore in assets under management and 52.33% clients who had been associated with them for over 3 years — representing over 72.19 percent of the total private wealth of the Asset Under Management (AUM).
Some promising numbers
Anand Rathi Wealth has shown a consolidated profit of ₹45.11 crore on the revenues of ₹265.33 crore for the year ending March 2021. The company’s flagship vertical of Private Wealth has grown at a CAGR of 20.14% in FY20-21. For FY19-20 the company made a profit of ₹61.61 crore on revenues of ₹331.83. Going further back to FY19, Anand Rathi Wealth witnessed a profit of ₹58.42 crore on revenues of ₹276.52.
The decline in profits between 2019-2021 has been attributed to the pandemic and the business disruptions, market volatility, and hesitant investor attitudes that came along with the spread of COVID-19. However, despite the pandemic Anand Rathi was able to help clients with favourable investor conditions — the MF allocation of ₹11000 crore was distributed between 70% equity MF and 30% debt MF. Additionally, the listing of Anand Rathi Wealth’s equity shares is poised to provide greater liquidity to existing shareholders and create better visibility for the brand at large.
