Prudent Corporate Advisory Services IPO : 7 things to know

Prudent Corporate Advisory Services Ltd, one of the fastest growing mutual fund distributors and personal finance advisors, had filed its draft red herring prospectus (DRHP) in late August 2021 and SEBI had already given its observations and approval for the IPO in November 2021.

Normally, the IPOs are approved by SEBI in a time frame of 2 to 3 months unless there are other queries or clarifications that the regulator has. The IPO of Prudent Corporate Advisory Services Ltd will be entirely in the form of an offer for sale and the next steps in the process will only be commenced once the company firms up its issue details like the dates, indicative price band etc.
 

7 important things to know about the Prudent Corporate Advisory Services Ltd IPO

1) Prudent Corporate Advisory Services Ltd has filed for an IPO with SEBI which comprises entirely of an offer for sale of 85,49,340 shares. There will be no fresh issue component in the IPO.

However, since the price band for the proposed IPO has not yet been announced till date, the size of the fresh issue / IPO / offer for sale is not precisely known.

The company has leveraged extensively on the use of technology to catalyse its rapid growth in the mutual fund distribution business with a strong advisory tilt.

2) Let us talk about the offer for sale (OFS) portion of the Prudent Corporate Advisory Services IPO first. A total of 85,49,340 shares (or approximately 85.49 lakh shares) will be sold by the early investors and the promoters as part of the offer for sale.

The OFS component will not result in any fresh fund infusion or dilution of the capital or the EPS. However, the selling of stake by the early investors and the promoters will increase the free float of the company and facilitate listing of the stock.

3) Out of the total sale of 85,49,340 shares as part of the OFS and the overall IPO issue, a total of 82,81,340 shares will be sold by Wagner Limited. Now Wagner Ltd is an affiliate of the US based private equity investor, T A Associates. Currently T A Associates holds a total stake of 39.91% in Prudent Corporate Advisory Services and is the major shareholder of the company.
 

Wagner will be looking to substantially monetize it stake in Prudent Corporate Advisory through this OFS. In addition, promoter Shirish Patel will also offer 2,68,000 shares in this offer for sale. There are not other sellers offering shares as part of this offer for sale.

4) Prudent Corporate Advisory Services virtually acts as an interface between the asset management companies (AMCs), which originate and manage the mutual funds on the one side and mutual fund distributors (MFDs) or independent financial advisors on the other side.

Prudent Corporate Advisory is one of the largest independent retail wealth management services group (outside of bancassurance plays and broking plays) in India. It is ranked among the top mutual fund distributors in terms of average assets under management (AAUM) as well as in terms of commission received. The company has hugely benefited from the surge in MF and SIP collections in last couple of years.

5) Prudent Corporate Advisory essentially offers technology-enabled, comprehensive investment and financial solutions. This means, its focus is not just in the sale of mutual fund products but in fitting these products into the personal financial plans of investors to help them meet their long term goals.

Currently, Prudent Corporate Advisory is among the fastest growing national distributors (it is ranked in the top-10 mutual fund distributors) in terms of commission and AAUM. Its business has growth at a compounded annual growth rate (CAGR) of 34.4% in the five years to FY21.

6) For a mutual fund advisor like Prudent Corporate Advisory, it is not so much of assets under management (AUM) but more about assets under advice (AUA). This figure has grown at a CAGR of 24.42% over the last 3 years.

Currently, the AUA or assets under advice of Prudent Corporate Advisory stands at Rs.33,316 crore. Nearly 90% of the AUA of Prudent Corporate Advisory is in the form of equity fund AUM, which makes it a lot more attractive from a business standpoint. At an all India level, its share of commissions has grown from 4% in the year 2015 to 12% in the year 2021.

7) The IPO of Prudent Corporate Advisory Services Ltd will be lead managed by ICICI Securities, Axis Capital and Equirus capital. They will act as the book running lead managers or BRLMs to the issue.
 

Also Read:-

Upcoming IPOs in March 2022

Upcoming IPOs in 2022