Angel Broking files IPO document with Sebi; to value firm at about Rs 25 bn

Domestic broking firm Angel Broking filed its offer document with market regulator Securities and Exchange Board of India (Sebi) on Wednesday. The company is looking to launch an initial public offering (IPO) that will raise Rs 6 billion from the market, half of which will comprise of fresh fund raising to the tune of Rs 3 billion. Through the IPO, promoter Ashok Thakkar and World Bank arm International Finance Corporation (IFC) will also divest a part of their holdings. The fresh capital will be used for meeting working capital requirements. ICICI Securities, Edelweiss Financial Services and SBI Capital Markets are managing the IPO.

Sources say the IPO will value Angel Broking at around Rs 25 billion.

Earlier this year, ICICI Securities, also a broking and investment banking firm, came out with an IPO, which wasn’t well-received by investors. Key listed brokers include Motilal Oswal, IIFL and Edelweiss, however, they are not pure broking plays. As per a report by CLSA, Angel Broking ranked seventh in terms of number of active clients as of March 2018 with a four per cent market share. The top three players in terms of market share include ICICI Securities, HDFC Securities and Zerodha. Top five brokerages include three bank-backed players and one discount brokerage.

“We believe that average market-trading volumes will see a 20 per cent CAGR over FY18-21CL, aided by a steadily-rising market cap-to-GDP ratio (with new listings and market returns) and households’ increasing participation in equities, which is currently at 40-50 per cent of turnover (FY17),” says CLSA in a recent note. “However, a combination of price-based competition and a shift towards low-yielding derivative trades will drag growth in industry broking revenue and we see a 10 per cent CAGR over FY18-21 versus 21 per cent during FY14-18.”

Angel Broking is a leading independent full-service retail broking house in the country in terms of active clients. The company offers services such as broking, advisory, margin funding and loan against shares. It offers broking services through digital platforms as well as its network of more than 11,000 sub-brokers. Angel Broking has presence across 1,800 cities. As at June 30, 2018, the company managed Rs 113 billion in client assets. It operates over 1.11 million active broking accounts.