)
Computer Age Management Services, or CAMS, which claims to have a 60 per cent share in the mutual fund registrar and transfer agent business, would raise capital expenditure by at least 25 per cent this financial year. The company is betting on growth in the investor base, as well as in transaction volumes, says President and Chief Executive Officer N K Prasad.
“We think the mutual fund industry has seen relatively muted transaction volumes in the last few years. We used to have a significantly higher volume of transactions in the past… Transaction volumes can spike very suddenly. If the market movements are good, you will suddenly find there are…huge volume of transactions. So, our technology platform should have the capability to process that volume,” he said, adding the growth might not necessarily be seen this financial year.
The company’s capital expenditure usually ranges from Rs 10 crore to Rs 12 crore a year. This year, it plans to invest Rs 8-10 crore on technology alone. Total capital expenditure, including expenses on office infrastructure, is expected to stand at Rs 15-16 crore.
“Over a period of time, asset growth has been superseded by transaction growth very significantly…We expect that to happen in the future, too,” Prasad said. Transaction volumes are being driven by individual investors, who typically make smaller investments than institutional investors. Growth in systematic investments, which typically have an average ticket size of Rs 2,500, have also contributed to this, according to Prasad.
“Individual investors are growing — that population is growing. Systematic transactions, which were not very popular several years ago, are gaining popularity,” he said.
The increasing complexity of mutual fund transactions required greater technological capability, he said. Transactions had become more complex on account of regulatory changes, including know-your-client requirements and sending reports to the Financial Intelligence Unit, he added.
WHAT DOES AN MF RTA DO?
- It is primarily a record-keeping agency for mutual funds, which tracks unit holders’ investments and other details
- RTA (registrar and transfer agency) includes CAMS, Karvy Computershare and Franklin Templeton
- CAMS claims 60% market share
What does CAMS plan?
- Aims to ramp up technology spend
- Total capex to go up at least 25%
Why is CAMS increasing capex?
- Sees more investors coming in
- Sees an increase in transaction volume
- Increased complexity of mutual fund transactions needs more tech resources
