Angel Broking filed its offer document with markets regulator Securities and Exchange Board of India (Sebi) on Wednesday. The company is looking at an initial public offering (IPO) of equity to raise Rs 6 billion, half of which would be new funds.
Sources say the offer will value Angel Broking around Rs 25 billion.
Through the IPO, promoter Ashok Thakkar and World Bank arm International Finance Corporation (IFC) will divest part of their holding. The new capital will be used for working capital requirements. ICICI Securities, Edelweiss Financial Services and SBI Capital Markets are managing the IPO.
Earlier this year, ICICI Securities, also a broking and investment banking entity, came out with an IPO which wasn’t received well by investors. Key listed brokers Motilal Oswal, IIFL and Edelweiss are not purely broking entities.
A CLSA report ranked Angel Broking seventh in terms of number of active clients as of March, with a four per cent market share. The top three on this measure were ICICI Securities, HDFC Securities and Zerodha. The top five in the4 segment have three bank-backed ones and one discount brokerage.
“We believe average market trading volumes will see a 20 per cent compounded annual growth rate (CAGR) over FY18-21, aided by a steadily-rising market cap to Gross Domestic Product 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.
Adding: “However, a combination of price-based competition and a shift towards low-yielding derivative trades will drag (down) 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 an independent full-service retail broking house. The company offers services such as broking, advisory, margin funding and loan against shares. It offers broking services through digital platforms and 11,000-odd sub-brokers. As of end-June, the company managed Rs 113 billion in client assets and operates around 1.1 million active broking accounts.