Computer Age Management Service's (CAMS) initial public offering (IPO) is scheduled to hit the primary market on 21 September and close on 23 September. The issue comes at a time when the equity market has recovered from COVID-19 led disruptions. In fact, the most recent IPOs of Happiest Minds Technologies and Route Mobile received robust demand from institutional as well as retail investors.
About the company
CAMS is India's largest registrar and transfer agent of mutual funds. As per the Crisil report in November 2019, it has 69.4 percent mutual fund aggregate market share. Technology-based services provided by the company include electronic payment collections services business, insurance services business, alternative investment funds services business, banking, and non- banking services business, KYC registration agency business, and software solutions business.
Great Terrain, an affiliate of Warburg Pincus, holds the largest stake of 43.50 percent in the company. Other co-owners include NSE Investments, Faering Capital ACSYS Investments and HDFC Group.
CAMS IPO details
- IPO opens on: 21 September
- IPO closes on: 23 September
- Details on anchor allotment to be notified on: 18 September
- Price band: Rs 1,229-1,230 per share
- Issue size: 18,246,600 equity shares of which all are offer-for-sale, that is, shares sold by promoters/promoter and not a fresh issue of shares.
- Minimum subscription: 1 lot
- Maximum subscription: 13 lots
- Market lot: 12 shares
- To be listed on: BSE
Offer size available for allotment:
- Qualified Institutional Buyers: 50%
- Non-Institutional Investors: 15%
- Retail Individual Investors: 35%
Employee reservation: A discount of Rs 122 per share is being offered to eligible employees bidding in the employee reservation portion. Up to 182,500 equity shares are reserved for employees.
- The company aims to raise Rs 2,242 crore through the IPO, and the proceeds from the sale of equity will not be received by CAMS but entirely to promoters offloading its shares.
- NSE Investment Ltd, a wholly-owned subsidiary of NSE will be divesting its complete stake of 37.5 percent in CAMS as per SEBI's directive. In February, NSE received a letter from SEBI stating that it did not seek the market regulator's permission to acquire a stake in CAMS in 2013, a violation of Stock Exchange and Clearing Corporation Regulations. It was also directed to divest its entire stake in CAMS within a year and withdraw its directorship in CAMS.
- Book running lead managers to the issue are Kotak Mahindra Capital Company Limited, HDFC Bank Limited, ICICI Securities Limited and Nomura Financial Advisory and Securities (India) Pvt. Ltd.
What brokerages say
Analysts expect good investor interest for CAMS IPO.
"Earnings are generously distributed among shareholders. It reports return on equity of more than 25 percent. Considering a healthy balance sheet, high return ratio, and market leadership position, the IPO will see strong interest across market participants," said Jaikishan Parmar of Angel Broking Ltd.
"CAMS charges a percentage of AUM to AMC and charges more fees from equity mutual funds as compared to other categories of mutual funds. Change in the mix of the mutual fund industry towards higher equity and the buoyant market will be beneficial for CAMS revenue growth," Parmar added.