Prudent Corporate Advisory Services Ltd, distributor of mutual funds and other financial products, has received the Securities and Exchange Board of India’s (Sebi) nod to file its initial public offering (IPO), with US private equity (PE) firm TA Associates selling shares at that point.
The IPO is an offer for sale of 8.55 million shares by shareholders and promoters. Wagner, a vehicle of TA Associates, will sell up to 8.28 million shares, and Shirish Patel will offload up to 2.68 lakh shares. Wagner holds 39.91% stake, while Patel has 3.15% of the firm as of now.
ICICI Securities, Axis Capital and Equirus Capital are the book running lead managers for the issue.
Prudent Corporate Advisory primarily distributes mutual funds. It also distributes other financial products such as insurance, portfolio management schemes, alternative investment funds, and bonds.
TA Associates acquired a minority stake in Prudent in July 2018. The PE firm holds 39.91% stake, while Patel has 3.15% as of now.
In August, Prudent filed the draft papers for an IPO, first reported by VCCircle, wherein TA Associates’ vehicle Wagner would sell up to 8.28 million shares and Shirish Patel would offload up to 2.68 lakh shares.
The size of the IPO is likely to be at around Rs 500 crore ($67.4 million).
The firm offers digital wealth management solutions through FundzBazar, PrudentConnect, Policyworld, WiseBasket, Prubazar and CreditBasket.
As of 31 May, its assets under management (AUM) from the mutual fund distribution business stood at Rs 33,316 crore, 88.63% of it being equity-oriented. The company’s branches are spread across 105 locations in 20 states in India.
The firm 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 FY21, the firm distributed 86,988 policies across life and non-life insurance segments, with an aggregate premium of Rs 157 crore and the total brokerage received amounted to Rs 26.4 crore.
For FY21, total revenue from operations was Rs 286.5 crore against Rs 234.8 crore in the year-ago period. Net profit for the period stood at Rs 45 crore versus Rs 27.8 crore last year.
In October this year, Prudent Corporate Advisory Services acquired of Karvy Stock Broking Ltd’s mutual fund folios/assets under management (AUM).
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 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.
In a similar deal, recently-turned-unicorn startup Groww acquired the mutual funds business of IndiaBulls Housing Finance. In October, the Bengaluru-based investment platform’s parent Next Billion Technologies Pvt Ltd raised $251 million as part of its latest Series E funding led by IconiQ Growth, almost tripling its valuation to $3 billion in a little over six months.