Anand Rathi aims to double its assets under management in the next 3-5 years, says MD Amit Rathi

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Anand Rathi aims to double its assets under management in the next 3-5 years, says MD Amit Rathi
  • Anand Rathi Wealth deals with wealthy clients that have net worth of ₹5-50 crore of funds and invest their money majorly into mutual funds and then bonds.
  • “We believe in our business plan and the industry (capital markets), that gives you the chance to double AUM in the next three to five years. We aspire for 25-30% average growth rate in the next five years,” said Amit Rathi, managing director at Anand Rathi.
  • Adding to it, the wealth management firm has raised a good amount of funds i.e., ₹193 crore from 12 anchor investors ahead of the IPO.
Ongoing initial public offering (IPO) of Anand Rathi Wealth, a wealth management firm that deals with wealthy clients that have net worth of ₹5-50 crore of funds, seems to be heading towards a good IPO run after strong demand from anchor investors. And the fact that the IPO has already been subscribed 235% till 1:50 p.m., on December 3, shows strong demand for the shares.
Investor category Subscription status
Qualified institutional investors 0.01 times
Non-institutional investors 2.46 times
Retail3.75 times
Overall2.35 times

The wealth management firm has raised ₹193 crore from 12 anchor investors before the IPO, out of which 9 were mutual fund houses.

Anchor investors are marquee institutional investors who are allotted shares in an IPO before the issue opens. As the name suggests they ‘anchor’ the IPO issue by agreeing to subscribe to shares at a fixed price and thereby indicate a healthy demand for the soon-to-be listed shares.

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In fact, the company has set a solid target to grow their business in the next couple of years. “We believe in our business plan and the industry (capital markets), that gives you the chance to double assets under management (AUM) in the next three to five years. We aspire for 25-30% average growth rate in the next five years,” said Amit Rathi, managing director at Anand Rathi in an interview with Business Insider.

Anand Rathi Wealth that deals with high-net-worth clients allocates majority of client’s investments into equity mutual funds.
Break-up of AUM% of AUM as on August 2021
Equity mutual fund42.56%
Debt mutual fund14.95%
Structured products/MLDs 31.05%
Direct equity and others11.44%

Its assets under management comprises mutual fund schemes and other financial products such as bonds, non-convertible market linked debentures and other securities held by clients in their own demat accounts. As of August 2021, about 57% of their AUM is into equity and debt mutual funds.

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This also means the company earns the majority of their income from mutual fund business in terms of commission earned on value of client investment.

On the bright side, Anand Rathi Wealth is amongst the top three non-bank mutual fund distributors in the country that earn the highest gross commission.
Mutual fund distributors Gross commission as of FY21
NJ IndiaInvest₹873 crore
Prudent Corporate Advisory₹263 crore
Anand Rathi Wealth ₹98 crore
Darshan Services ₹91 crore
IIFL Wealth Finance₹88 crore
Source: DRHP

From 57% of the firm’s AUM in mutual funds, 41% is into equity-related schemes. Hence movement in equity markets matters a lot to the firm.

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Rathi feels that the next couple of years looks pretty good for the equity market given strong earnings growth.

“Corporate profitability is growing very very sharply due to which, results are fairly strong right now. One major benefit for India is also the fallout of China. Global companies are trying to diversify their supply chains out of China (plus one strategy). Amid this, Make in India initiative, incentive schemes (PLI) and macro environment makes the market environment extremely strong. Also, since there is no election for the next two years, there is no political risk in India as well. So things are looking good and we do not expect another lockdown with rising vaccinations,” said Rathi.

However, he says that only if inflation really shoots up to the roof and interest rates go to 5-6% then there could be a correction.

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The company started business activities in fiscal 2002 and has evolved into providing well-researched solutions to its clients through a mix of wealth solutions with presence in 11 cities in India and a representative office in Dubai.

Anand Rathi Wealth
AUM (as on August 2021)₹30,200 crore
No of active client families 6,564
Average ticket size of investors ₹4.5 crore
Relationship managers 233
Note: Relationship managers are professionals who handle clients' portfolios and guide them through their financial goals.

Anand Rathi Wealth opened its IPO for investors from December 2 and will close on December 6. The IPO is a complete offer for sale of 1.2 crore shares by existing shareholders and promoters.

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Shares of the company are demanding a premium of ₹125 in the grey market, indicating a good listing.

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