Angel Broking, country's fourth largest retail broking house in terms of active clients on the National Stock Exchange (NSE), will launch its IPO on Tuesday to raise Rs 600 crore. The IPO which will close on Thursday comprises a fresh issue and offer for sale of Rs 300 crore each. The price band has been fixed in the range of Rs 305-306 per equity share.
Promoters Ashok D. Thakkar and Sunita A. Magnani will offload equity shares aggregating up to Rs 18.33 crore and Rs 4.5 crore, respectively, while World Bank's private-sector investment arm International Finance Corporation (IFC) will sell shares worth Rs 120 crore. Individual shareholders will offload Rs 157.16 crore.
Proceeds from the fresh issue will be used in meeting long-term working capital requirement and for general corporate purposes.
The broking house had filed its draft prospectus with the market regulator Sebi in September 2018. On the delay, the management, in a virtual press conference announcing the IPO launch says,"Broking industry is well regulated by the Sebi and exchanges. So, a certain technical eligibility criterion we had to fulfill. We got approval from the exchanges in early 2019. Sebi approval came in late 2019. The IPO could have come earlier, but uncertain market environment due to COVID-19 delayed our launch plans."
Meanwhile, the new margin rules by the Sebi, introduced on September 1, have changed the game for the broking industry. The new rules are expected to hit broking income. Reacting to the new Sebi norms, the brokerage firm says it is not the first time that the market regulator has brought out changes. "A temporary blip in customer participation and hence in trading volumes is expected, but there will not be a significant impact over the long-term. These rules will help market participants gain confidence in the ecosystem."
The company posted Rs 246.6 crore revenue in the first quarter of FY21 of which Rs 178.1 crore comprised broking income. In FY20, the brokerage recorded revenues of Rs 754.7 crore, of which Rs 503.9 crore came from the broking business, while Rs 176.6 crore and Rs 74.2 crore consisted of interest and other income, respectively.
Angel Broking recorded a compounded annual growth rate (CAGR) of 151.9 per cent in terms of average monthly net client addition to 1.13 lakh in Q1FY21 from 0.14 lakh in FY18, as compared to 43.6 per cent CAGR for the industry which grew to 7.69 lakh in Q1 FY21 from 3.40 lakh in FY18. Of its total client addition in Q1FY21, 85.2 per cent were sourced digitally.
ICICI Securities, Edelweiss Financial Services and SBI Capital Markets are the book-running lead managers to the Angel Broking IPO. One lot will comprise 49 equity shares.
The shares will be listed on BSE and NSE both.
This will be the eighth IPO in 2020 after SBI Card, Rossari Biotech, Mindspace Business Parks REIT, Happiest Minds, Route Mobile, CAMS and Chemcon Speciality Chemicals.