Computer Age Management Services or CAMS, which claims a 60% share in the mutual fund Registrar and Transfer agent business, will raise capital expenditure by at least 25% in the current financial year.
The company is betting on a growth in investor-base and transaction volumes according to NK Prasad, President and Chief Executive Officer of the company.
“We think that the mutual fund industry has seen relatively muted transaction volumes in the last few years. We used to have significantly higher volume of transactions in the past. Transaction volumes can spike very suddenly. If the market movements are good, you will suddenly find that there are…huge volume of transactions. So our technology platform should have the capability to process that volume,” he said, though adding that the growth may not necessarily happen in the current financial year.
The firm generally invests in the range of Rs.10-12 crore on capex. This year, they plan to invest Rs 8-10 crore just on technology, with total capex including other expenses such as office infrastructure expected to be at Rs 15-16 crore.
Interestingly, the number of transactions are growing faster than growth in assets, which increases resource requirements.
“Over a period of time, asset growth has been superseded by transaction growth very significantly. We expect that to happen in future as well,” he said.
Transaction volumes are being driven by individual investor who typically make smaller ticket size investments than institutional investors. Also adding to it is the growth of systematic investments which have typically have an average ticket-size of Rs 2,500, according to Prasad.
“It is the individual investors who are growing, that population is growing. Second is that the systematic transactions which were not very popular several years ago, they are gaining popularity,” he said.
He suggested that the increasing complexity of mutual fund transactions also adds to the need for greater technological capability. Transactions have become more complex on account of regulatory changes including KYC(Know Your Client) requirements and sending reports to the FIU(Financial Intelligence Unit), he said.
