Leading technology-driven financial services platform, KFIN Technologies has filed a draft red herring prospectus (DRHP) with the market regulator to float its initial public offering (IPO) amounting to ₹2,400 crore.
The IPO is entirely an offer for sale (OFS) where shareholder General Atlantic Singapore Fund will offload stakes to the tune of ₹2,400 crore.
Kotak Mahindra Bank, ICICI Securities, Jefferies, JP Morgan, and IIFL Securities are acting as the book running lead managers for the issue.
The objective of the offer is to carry out the offer for the sale of equity shares by General Atlantic; achieve the benefits of listing the Equity Shares on the Stock Exchanges. KFin will not receive any proceeds from this IPO, as such proceeds will go to General Atlantic.
The face value of the equity shares offered in the IPO is ₹10 each. However, details such as price band, the reserved portion for investors category, issue period, and the number of equity shares to be offered among others will be announced in due course. Post the IPO, the shares are proposed to be listed on the BSE and NSE.
KFin Technologies is a leading technology-driven financial services platform providing comprehensive services and solutions to the capital markets ecosystem including asset managers and corporate issuers across asset classes in India and provides several investor solutions including transaction origination and processing for mutual funds and private retirement schemes in Malaysia, Philippines and Hong Kong.
As of January 31, 2022, the company emerged as the country’s largest investor solutions provider to Indian mutual funds, based on the number of AMC clients serviced. The company currently provides services to 25 out of 42 AMCs in India, representing 60% of the market share based on the number of AMC clients. The company services are 270 funds of 157 asset managers in India as of January 31, 2022, representing 32% market share based on the number of AIFs being serviced.
The company’s history of profitable growth is reflected in its profit for the period/year, gross profit, and EBITDA evolution over recent years.
KFIN’s revenue grew at a CAGR of 4.42% between Fiscal 2019, on a proforma basis, and Fiscal 2021. Further, its Gross Profit grew at a CAGR of 15.09%, between Fiscal 2019, on a proforma basis, and Fiscal 2021. While, over the same period, operating EBITDA grew at a CAGR of 21.70%. Meanwhile, Gross Margin increased from 48.73% in Fiscal 2019, on a proforma basis, to 59.20% in Fiscal 2021 while Operating EBITDA margin increased from 30.25%in Fiscal 2019, on a proforma basis, to 41.09% in Fiscal 2021, driven by revenue mix, operating leverage, adoption of our platform as a service model, higher subscriptions to VAS, optimizing our employee headcount, improved employee productivity and ongoing operational optimization due to our integrated technology stack as we benefitted from scale efficiencies.
Among its many strategies going forward, KFIN intends to continue to grow the overall share of revenues from the sale of these services to existing and new clients. The company is undertaking marketing and sales initiatives across its platform to target new clients and expand its client base. The company is expanding its business in Malaysia and Hong Kong, with the acquisition of 10 clients until December 31, 2021. In addition, the company has signed on three AMCs in Malaysia and Singapore that are yet to go live. Further, the company plans to deepen its presence in South East Asia and has expanded its international sales team by adding additional country sales heads in South East Asia.
Within domestic mutual fund solutions, the company plans to leverage its differentiated technology combined with a platform approach and depth of value-added products which are key elements of the new client acquisition strategy. Within issuer solutions, the company intends to continue focusing on sales efforts on the back of a track record of execution and delivery as well as various value-added products. Furthermore, KFin plans to utilize access to talent in India and existing financial technology capabilities to deliver next-generation services in such markets in the future.
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