Opportunities knock only once. But have you witnessed a scenario where you are visited by them one after the other? The COVID-19 pandemic became a nightmare hitting all the sectors of the economy like a tsunami. The markets went really abrupt, with investors facing huge losses and stocks seeing a tremendous correction. In short, everyone was given a free ticket to a roller coaster ride having a series of ups and downs. But it did not stop with that.
COVID-19 also paved the way for numerous opportunities. As of the markets, it saw a record-breaking number of companies signing up for IPOs. While the list keeps getting bigger as days go, the CAMS IPO will also be added to it as a new entrant.
The company is all set to hit the markets soon. Opening on 21st September, this is supposed to be the 5th IPO that the market will be having ever since the lockdown. Hence, in this blog, we will take you through a quick tour of the various details surrounding the CAMS IPO.
CAMS – A tour about its history
Before you jump on board, it is essential that you are well aware of some of the key details pertaining to the company. CAMS or Computer Age Management Service is claimed to be the largest registrar and transfer agent of mutual funds. Having years of experience in the field, the company already seems to attract a lot of attention.
It is co-owned by Great Terrain, who are also its promoters, and a few public shareholders with NSE investment holding a major portion. Great Terrain is a part of Harmony River investment, which is a US-based private equity Fund and an affiliate of the Warburg Pincus.
Great Terrain holds about 43.53% of the stake along with NSE 37.48% of the stake. The rest is owned majorly by HDFC bank, HDFC trust, and Acsys investments. Having its headquarters stationed in Chennai, the company is planning to make the entire issue through the offer for sale.
Thus, you will not be seeing anything in the form of a fresh issue as it happened with other companies like Happiest minds. The company has a decent base of clients as they contribute about 69-70% of the aggregate market share in terms of mutual fund Average Assets Under Management (AAUM).
Is CAMS IPO worth investing?
CAMS is a company that relies greatly on technology to top the market as the best financial infrastructure servicing firm, offering services including user integration, payment interface, and processing to its clients.
Apart from this, the company renders a wide array of services ranging from interface management to other technology-related services to not only the mutual funds' sector but also to other organizations that fall under the category of investment, banking, insurance, and non-banking sector.
CAMS also has the top 9 mutual funds out of 15 mutual funds, in terms of AAUM, onboard as their clients. The company usually charges a percentage of the AUM to AMC. In the case of equity-based mutual funds, it charges higher than others. Thus, the increased movement and changes in the mix towards equity-based funds, the company states that there might be a good growth prospect in the years to come.
The company holds a business model that is extremely asset-light, and therefore the shareholders can expect generous returns on the stock held.
The financials also speak of a healthy story that might interest a lot of investors who are already rushing to find a place. The fact that the company has a reported RoE exceeding 25% and a good return ratio in its possession happens to be an added advantage.
To sum up, the company's profile translates into a recipe that has enormous growth potential and a good trend of future returns for its investors.
Details on CAMS IPO
Now it's time we look into details pertaining to the issue, which would be happening shortly.
CAMS IPO Review - The company is aiming to raise about 2258 crore from the proposed offer for sale. This would come in the form of 1,82,46,600 equity shares, of which approximately 1,82,500 equity shares will be blocked for subscription exclusively for its employees who are deemed to be eligible. In this case, the employees will be getting a special privilege wherein they will offer the share at a discount of Rs.122 per equity share. The entire offer for sale would ultimately constitute approximately 37.40% to 37.03% of the firm's post-offer paid-up capital.
The offer for sale will result from its shareholders parting with a portion of their stake in the company. That is, stakeholders like NSE will be completely offloading their stake in the company and exiting the firm. Hence, the company is keen on diversifying the shareholding via sale and transfer of equity shares as per the instructions of SEBI.
CAMS IPO Allotment status - The subscription for the same is scheduled to open on 21st September and will end on 23rd September. The shares are to be listed in BSE. Moreover, individuals can place a bid for a minimum of 12 equity shares and in multiples of 12 thereafter. The highest anyone can bid for is being restricted to 13 such lots. The share will have a face value of 10.
The price band per share will range from 1229-1230. The issue is guided by HDFC Bank, Kotak Mahindra Capital Company, Link Intime India, Nomura financial and advisory securities, and ICICI securities. Further, the anchor of allotment is to be announced on Friday.
To sum up
Holding the lion's share in the market, the company has already seen an oversubscription in the grey market. A unique line of business seems to enthuse confidence among investors. Good domain experience, effective use of technology, and healthy financials ensure that your money is in safe hands. Further, the company has already expressed its confidence in seeing a good subscription. Hence, it will be opportune to quickly make a decision and place your bid before the opportunity slips away. You can refer to Youtube