The initial public offer of KFin Technologies has rekindled investor interest in tech-enabled financial services companies. These registrar and transfer agents (RTAs) manage the back-office operations of mutual fund houses and extend their services to other pooled vehicles such as alternative investment funds and companies for recordkeeping. RTAs are expected to grow as the financial service sector that they service expands. Investors want to benefit from the long-term growth opportunity by owning shares of RTAs. No wonder mutual funds too want a pie for their investors.
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The Rs 40 lakh crore mutual fund sector is serviced by two RTAs – KFin and Computer Age Management Systems (CAMS). KFin provides back-office operations to 27 of the 43 mutual fund houses and the rest are serviced by CAMS. Over 10 years, the number of RTAs catering to mutual funds has shrunk due to consolidation spurred by the need for tech-enabled services that facilitate mutual fund investments in a digital world in a cost-efficient manner. These two RTAs share the mutual fund business and are seen as a proxy for the growth of mutual funds.
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The list of KFin’s anchor investors shows that 17 mutual fund schemes of eight mutual fund houses have got KFin shares. These schemes were allotted 6.97 million shares worth Rs 254.99 crore. All the eight mutual fund houses that were allotted the shares are serviced by KFin.
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Shares of CAMS were listed after its IPO in September 2020. The CAMS stock was offered in a price band of Rs 1,229 to Rs 1,230, and closed at Rs 2,187.20 on the NSE on December 19.
Mutual fund schemes have been investing in CAMS shares since the IPO. Some investors booked profits within a year of investing at around the IPO time. Although the CAMS share price has declined about 16 percent over the past year, 31 actively managed schemes held CAMS shares worth Rs 602 crore on November 30, 2022. After KFin shares are listed, it will be interesting to see if mutual fund houses lap them up.
