TA Associates-backed wealth manager and mutual fund distributor, Prudent Corporate Advisory Services, which has filed for an initial public offering (IPO), announced on Friday the acquisition of Karvy Stock Broking Ltd mutual fund folios/assets under management (AUM).
The acquisition has been done through a bidding process conducted by a joint committee of stock exchanges comprising National Stock Exchange of India Ltd (NSE), BSE Ltd and the Metropolitan Stock Exchange of India Limited (MSEI), the company said in a statement.
As of July 2021, Karvy Stock Broking had 11.98 lakh folios having a total AUM of Rs 9,261 crore. It has 4.2 lakh live SIPs with an input value of Rs 87 crore a month and a sub-distribution network of over 5000 mutual fund distributors.
TA Associates acquired a minority stake in Prudent in July 2018.
Prudent provides personal and corporate investment planning services through the distribution of mutual funds, bonds, broking and insurance products, according to its website.
In August, Prudent filed the draft papers for IPO, first reported by VCCircle, wherein TA Associates’ vehicle Wagner will sell up to 8.28 million shares and Shirish Patel will offload up to 2.68 lakh shares.
TA Associates holds 39.91% stake while Patel has 3.15% of the firm as of now.
The size of the IPO is likely to be at around Rs 500 crore ($67.4 million).
“Acquisition of Karvy’s MF folios will help strengthen our presence in the retail financial product distribution space. Prudent has been successful in growing the MFD network from 8,378 as on March 2018 to 17,583 as on May 2021 at a CAGR of 26.35%,” said Shirish Patel, CEO of Prudent Corporate Advisory Services.
In a similar deal recently, recently-turned-unicorn startup Groww acquired the mutual funds business of IndiaBulls Housing Finance. Earlier this week, the Bengaluru-based investment platform’s parent Next Billion Technologies Pvt Ltd raised $251 million as a part of its latest Series E funding led by IconiQ Growth, almost tripling its valuation to $3 billion in a little over six months.
Wealth management firms have been richly valued over the last year. Zerodha Broking Pvt Ltd, which also has investment products on its platform, said it had crossed $2 billion in valuation last month. In 2019, the wealth management arm of IIFL Group demerged from the parent entity and currently has a market capitalisation of around Rs 10,000 crore.
As on 31 May, its AUM from the mutual fund distribution business stood at Rs 33,316 crore, 88.63% of it being equity-oriented.
Prudent Corporate Advisory Services was incorporated in 2003 and provides wealth management services to 772,899 retail investors. It distributes life and general insurance products in India through its wholly owned subsidiary, Gennext.
In fiscal 2021, the firm distributed 86,988 policies across life and non-life insurance segments, with an aggregate premium of Rs 157 crore and total brokerage received amounted to Rs 26.4 crore.
Its total revenue from operations grew to Rs 286.5 crore against Rs 234.8 crore a year ago. Net profit for the period stood at Rs 45 crore versus Rs 27.8 crore last year.