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Last Updated : Aug 14, 2019 04:06 PM IST | Source: Moneycontrol.com

Exclusive | NSE, Warburg Pincus & HDFC-backed CAMS eyeing IPO in 2020

Ashwin Mohan @ashwinmohansays

Highlights:

- Shortlists ICICI Securities, Kotak Mahindra Capital and Nomura as merchant bankers
- IPO said to hit the market in April-June quarter of 2020
- CAMS looks to raise around Rs 1,000-1,200 crore, sources said

- Proposed IPO will facilitate partial/complete stake dilution of existing investors

Leading mutual fund transfer agency Computer Age Management Services (CAMS), which is backed by NSE, private equity fund Warburg Pincus and HDFC Group, has shortlisted merchant bankers  and initiated the process for an initial public offer in 2020, sources told Moneycontrol.

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Chennai-based CAMS serves 67 percent of the assets of the industry across 16 mutual funds and is also backed by Indian mid-market private firm Faering Capital and NBFC ACSYS Investments Private Ltd.

"ICICI Securities, Kotak Mahindra Capital and Nomura have been shortlisted as bankers for the proposed IPO by CAMS, which is likely to hit the markets in the April to June quarter in 2020. As of now, the plan is to raise between Rs 1000-Rs 1200 crore though the issue size is yet to be finalised and may vary later," a source told Moneycontrol.

"The proposed IPO will facilitate partial or complete stake dilution and monetisation by existing investors of CAMS and will involve a secondary issue of shares by them," added a second source. Another source confirmed the same.

NSE is the largest shareholder in CAMS, holding 37.50 percent stake. In March 2018, NSE divested 7.5 percent of its 44.99 percent stake in CAMS to Warburg Pincus for a consideration of Rs 249.13 crore.

In the same month, HDFC said it had sold a 5.1 percent stake in CAMS to Warburg Pincus for Rs 169.52 crore and retained a 5.99 percent stake in the entity. The deal valued CAMS at Rs 3325 crore.

Along with peer Karvy, CAMS is a key player in the mutual fund industry as it has developed and manages the core technology systems used to process mutual fund transactions and maintain investor records. Its services to the segment include account set up, transaction processing, record keeping, customer care services, commission administration, risk management and compliance. It is also engaged in services related to insurance, venture funds, banks and NBFCs. CAMS has four back office delivery centres in Chennai and a BCP (business continuity plan) site at Coimbatore, about 500 kms from Chennai and a pan India network of 280+ customer service centres. The consolidated operating revenues of CAMS for financial years 2014-15, 2015-2016 and 2016-2017 were Rs 383.6 crore, Rs 397.9 crore and Rs 478.3 crore respectively.

According to the EY global IPO trends report, investors and issuers in India took a wait-and-see approach in Q2 2019 due to elections.

As a result, Q2 2019 volumes dropped 11 percent from Q1 2019 (from 18 to 16), while proceeds declined 50 percent (from US$983m to US$489m). In H1 2019, India saw a 68 percent decline in IPOs and a 66 percent drop in funds raised compared with H1 2018.

"The secondary markets have been volatile in the past few weeks, which impacts deal launches, especially IPO’s. As a result, while we are witnessing a fair bit of activity on DRHP filings, IPO launches may have to wait for a better sentiment and stability in the secondary market," said Manan Lahoty, Partner at law firm L&L Partners.

ICICI Securities declined to comment on queries sent by Moneycontrol.

Moneycontrol is awaiting response from others and will update this article as soon as it hears from them.

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First Published on Aug 14, 2019 03:54 pm
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