Prudent Corporate Advisory Services Limited IPO

Prudent Corporate Advisory Services Limited

Rs.13,685 / 23 shares
Minimum Investment

IPO Details

IPO date:
10th May to 12th May, 2022

Issue size:
Rs. 537.94 crs

Listing at:
BSE & NSE

Retail quota:
35%

IPO price:
Rs 595 - Rs 630 per equity share

Minimum lot size:
23 equity shares and in multiple of 23 equity shares thereafter

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Prudent Corporate Advisory Services Company Background

Prudent Corporate Advisory Services is an independent retail wealth management services group in India and is amongst the top mutual fund distributors in terms of average assets under management (“AAUM”) and commission received (Source: CRISIL Report).

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The company offers a technology enabled, comprehensive investment and financial services platform with end-to-end solutions critical for financial products distribution and presence across both online and offline channels. It grew faster among national distributors (amongst the top 10 mutual fund distributors) in terms of commission and AAUM with a CAGR of 34.4% and 32.5% respectively for the five year period ending Fiscal 2021 (Source: CRISIL Report). It believes it has become an important interface between asset management companies (“AMCs”) and mutual fund distributors or independent financial advisors (“MFDs”) (and by extension, retail investors who avail services from such MFDs), over the last two decades. The company is an independent platform with no single AMC contributing more than 15% of its AUM as of December 31, 2021.

As on December 31, 2021, the company’s assets under management from the mutual fund distribution business (“AUM”) stood at Rs 484,114.74 million with 92.14% of its total AUM being equity oriented. Among national distributors the company’s market share on commission received basis has increased from around 4% in Fiscal 2015 to around 12% in Fiscal 2021.

Incorporated in 2003, the company provided wealth management services to 13,51,274 unique retail investors through 23,262 MFDs on its business-to-business-to-consumer (“B2B2C”) platform and are spread across branches in 110 locations in 20 states in India, as on December 31, 2021.

Let us now look at a few competitive strengths and strategies of Prudent Corporate Advisory Services Limited...

Competitive Strengths

+ A Growing Independent Financial Products Distribution Platform : Prudent Corporate Advisory Services is an independent retail wealth management services group in India and is amongst the top mutual fund distributors in terms of AAUM. Commissions from the distribution of mutual funds have been the top contributing business vertical for the company. Its AAUM has grown at a CAGR of 32.5% to Rs 249,100 million in the five year period ending Fiscal 2021 while in the same period mutual funds distributors’ AAUM grew at an approximate CAGR of ~12% and touched Rs 10.19 trillion in Fiscal 2021 (Source: CRISIL Report). The company had 12% market share within the national distributor segment on AAUM basis as of Fiscal 2021. It grew faster among national distributor (amongst the top 10 mutual fund distributors) in terms of commission and AAUM with a CAGR of 34.4% and 32.5%, respectively for the five year period ending Fiscal 2021 (Source: CRISIL Report).

+ Granular Retail AUM with a Mix Skewed Towards High-Yield Equity AUM : As of December 31, 2021, the company had an AUM of Rs 484,114.74 million and is among the top mutual fund distributors on AAUM basis. Of this its equity AUM stood at Rs446,059.12million as of December 31, 2021. Individual investors tend to stay invested for longer periods and prefer equity-oriented schemes, providing predictable, committed AUM to mutual funds and steady, recurring inflows for distributors as well. In equity AUM, the share of individual AUM in the under > 24-month bucket witnessed a sharp increase of 8% percentage points from March 2016 to September 2021. (Source: CRISIL Report) As of December 31, 2021, the company provided wealth management services to 13,51,274 unique retail investors, through 23,262 MFDs. The company believes its focus on retail investors and systematic investment plan (“SIP”) has helped it in having a stable flow of investments from retail investors through SIPs accounts. The number of live SIPs on its platform is being 1.53 million as of December 31, 2021, with the corresponding equity AUM from SIPs standing at Rs 189499.09 million (representing 42.48% of its total equity-oriented mutual fund AUM) as of December 31, 2021. The number of active SIPs has increased from 0.79 million in Fiscal 2018 to 1.03 million in Fiscal 2021 to 1.53 million as of December 31, 2021. The company believes the increase in equity mix and retail investor base has been driven by its focus on digital offering and its extensive MFD network across all the country, including B-30 markets. Further, 47.09% of its SIPs are perpetual, that is till 2099 or until cancelled and the rest have an average maturity of 17 years, demonstrating the relative stickiness of investment inflows through this route.

+ Value Proposition Leading to Increased Participation and Long-Standing Relationship with MFDSThe company offers a comprehensive multi-product investment platform with end-to-end solutions critical for financial products distribution. It’s offerings for MFDs include various technology platforms for them as well as for their retail investors, with continuous support through its 59 member in-house technology and 55 member back-office service team. The company has been successful in growing its MFD network from 8,378 as on March 31, 2018 to 23,262 as on December 31, 2021 at a CAGR of 31.24%. As per CRISIL, as on December 31, 2021 there were 126,000 ARN holders registered with AMFI, while the number of ARNs empanelled with the company stood at 23,262. Further, 84,784 MFDs have joined the industry during the period between April 1, 2016 and December 31, 2021. (Source: CRISIL Report) During the same period, the company has added 18,915 MFDs on its platform, which it believes is a demonstration of its ability to provide a consistent and attractive value proposition for MFDs. This has helped the company to increase the number of retail investors served from 549,881 as of March, 2018 to 1,351,274 as of December 31, 2021. The company continues to enjoy long-standing relationships with its MFDs, with more than 50.60% of its AUM as of December 31, 2021, being contributed by MFDs who are associated with the company for more than five years. Further, its MFD base is well-diversified, with the company’s top 50 MFDs (by AUM) contributing only 8.52% of total AUM, as of December 31, 2021.

+ Track Record of Innovation and Use Of Technology to Improve Investor and Partner Experience The company believes that its experience of over two decades has helped to integrate its knowledge and expertise in financial product distribution with technology and provide a comprehensive business platform to partners. The company’s technology solutions help its partners to increase their focus on their core competence of managing clients without a need to make significant investments in operational infrastructure. Over the years, the company has enhanced partner engagement and experience through digitisation of processes and augmentation of technology platforms.

+ Experienced Management Team Backed by a Global InvestorThe management team has extensive experience in the financial services sector. The company’s Chairman and Managing Director and Promoter, Mr. Sanjay Shah has over two decades of experience in the financial services industry. Further, the CEO and Director, Mr. Shirish Patel, and Director, Mr. Chirag Shah as well as Chief Financial Officer, Chirag Kothari each has experience of more than 15 years and is supported by a qualified and motivated pool of 1,067 employees (as of December 31, 2021).

Key Strategies

Here are a few strategies Prudent Corporate Advisory Services has for its business:

Continue to focus on increasing geographic reach and strengthening relationships with MFDs
Leverage its existing MFD network to distribute products and services
Continue innovating its technology platforms to provide superior experience to its MFDs and their clients
Add new offerings to its existing portfolio

Prudent Corporate Advisory Services Limited Consolidated Financials

And finally here’s a look at key financials of Prudent Corporate Advisory Services Ltd.

Revenue from operations

Particulars (in Rs. million)

Particulars (in Rs. million)

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Prudent Corporate Advisory Services Limited Ltd FAQs

The Prudent Corporate Advisory Services Limited IPO has an issue size of Rs. 537.94 crs. The IPO opens for subscription on 10th May 2022, and ends on 12th May 2022.

The allotment dates are yet to be announced .

Link Intime India Private Limited is the registrar for this IPO.

The dates are yet to be decided.

You can read more about Prudent Corporate Advisory Services Limited and its IPO from the company’s draft red herring prospectus (RHP) here