Angel Broking has filed its draft red herring prospectus (DRHP) with SEBI. The Mumbai-based financial services company plans to float itself on stock exchanges through an issue which will include a mix of fresh shares and an Offer For Sale (OFS). Angel Broking IPO will facilitate an exit to International Finance Corporation (IFC) which is among the largest shareholders.
The IPO will be managed by ICICI Securities, Edelweiss Financial Services and SBI Capital Markets. Link Intime will be the registrar.
In the draft prospectus, the company said it plans to raise INR300 crore (INR3 billion) by issuing new shares. These funds will be used towards working capital requirements (INR230 crore) and for general corporate purposes.
Angel Broking IPO OFS = INR300 crore
In addition to the fresh shares worth INR300 crore, a similar amount will be mobilized by existing shareholders participating in Angel Broking IPO. The IPO will offer an exit to investors, including promoters Ashok Thakkar, Sunita Magnani, World Bank’s private equity arm IFC, and others. The latter holds 12,927,760 shares or 17.96% equity in the company. Promoters and Promoter group own 55.2% equity.
IFC plans to offload shares worth INR120 crore while Ashok Thakkar and Sunita Magnani will offer shares worth INR20.8 crore and INR3.1 crore, respectively. Dinesh Thakkar – the other promoter – is not participating in the OFS.
Broking and distribution
Incorporated in 1996, Angel Broking is involved in broking and advisory services, margin funding, loans against shares and distribution of financial products. The company operates through a network of over 110 branches and more than 11,000 sub-brokers in 1,800 cities and towns, as of 30 June 2018. It managed INR1,1302.3 crore in client assets and over 1.11 million active broking accounts as of 30 June 2018.
Soaring equity markets = high revenues and profits
Thanks to soaring equity markets in the last few years, more and more retail investors have come back to direct equities. This means more brokerage for players like Angel. No wonder its revenues increased from INR348.9 crore in FY2014 to INR784.4 crore in FY2018. Since costs don’t increase proportionately in broking business, profits zoomed from INR11.4 crore to INR107.9 crore in the same timeframe