CAMS IPO subscribed 82% on day one itself — CEO shares the 30-year journey to an IPO
- The ₹2,244 crore CAMS IPO was subscribed 82% on the first day.
- The company has fixed the price band for its public offer at ₹1,229-1,230 per share.
- Business Insider caught up with the CAMS President and the CEO Anuj Kumar and the CFO M Somasundaram in an exclusive chat to understand their business and growth plans going ahead.
This technology-driven financial services and infrastructure provider to the Indian asset management companies (AMC), is off to a good start. The ₹2,244 crore CAMS IPO was subscribed 82% on the first day. The IPO received bids for 10.5 million shares against an offer size of over 12.8 million shares. The IPO will remain open for subscription until tomorrow (September 23).
Here are the CAMS IPO details:
|Opening date||September 21|
|Closing date||September 23|
|IPO target||₹2,240 -₹2,242 crore|
|Price Band||₹1,229-1,230 per share|
|Minimum bid||12 equity shares|
CAMS is looking to raise ₹2,242 crore from its initial public offering. And this journey to an IPO has taken 30 years. Business Insider caught up with the CAMS President and the CEO Anuj Kumar and the CFO M Somasundaram, in an exclusive chat, to understand their business and growth plans going ahead.
What does CAMS do?
CAMS is India’s largest mutual fund transfer agency that provides MF services and statements to asset management companies. The CEO explained since mutual funds in India are “completely outsourced on the liability operation side.” Their job is to maintain KYC for MF investors, record keeping, risk management, compliance, distributor service, commissioning among others to name a few.
The company holds nearly 70% of the market share in the mutual funds RTA segment. “We have other businesses as well, but this is the core franchise that we have created over the last two and a half decades,” CAMS CEO Anuj Kumar added.
The company also has other businesses as well, but mutual funds registrar and transfer agent offering forms the core of its business.
“Apart from MF, we do work for the banks and non-banking institutions for insurance companies, as insurance depository participants. And, then we have a payment portal CAMS pay, and we support AIF’s and PMS in the servicing onboarding that kind of work,” he said.
Growth plans: The company is looking to diversify its revenue
According to the company’s red herring prospectus nearly 87% of company’s revenue comes from Mutual Funds, out of which nearly 70% comes from the top 5 clients of the company, the CFO M Somasundaram revealed during the interview.
“Think of the largest mutual funds in the country— SBI Mutual Funds, HDFC, ICICI, Birla and Kotak— these five will form top clients for us,” Kumar said.
|Mutual funds contribution to overall revenue||86.60%||86.80%||86.90%|
“We are trying to diversify our revenues from other streams, largely in the FSS arena, the financial service, largely derived from B2B businesses,” Kumar added.
The company is eyeing the insurance repository business where they have almost 40% market share. They expect that business to go through inflexion points over the coming years to register growth.
Kumar also added that insurance repository business, CAMS pay and other small businesses contributed 12-13% of the overall revenue pie, traditionally. And, the management is focused on improving the state of that. However, they still believe that over the coming years “Mutual Funds will continue to remain the mainstay of the company as far as revenue contribution is concerned”.
The lockdown impact
Despite being a “completely technologically driven company,” the CAMS business wasn’t immune to the coronavirus induced lockdown either. Kumar told Business Insider that during the lockdown period April-May, all branches of CAMS were shut and the physical selling activity which largely happens in branches of banks and happens in people’s houses was not possible due to the spread of the virus.
Another factor that impacted its business was the downfall in the overall market. “Valuation losses were there overall for the industry; that phase lasted about two months for April and May.”
However, in June, July and August, the company saw a significant reversal and the business started to come back as the equity market recovered, Kumar said. “They are probably still about 6% below the peak, but they have come back a long way; they were down almost 30%.” However, the impact can still be seen as “at the peak, we were servicing just short of 20 lakh crore of assets now we support about 19 lakh crore. So there was some change that happened during the COVID phase.”
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