KFin Technologies IPO intends to raise ₹ 1,500 Cr entirely through an offer for sale. KFin provides services and solutions to asset managers and corporate issuers across various asset classes in India and abroad.

  • IPO Date: 19th Dec’2022 – 21st Dec’2022 etc.
  • Price band: ₹ 347 – 366
  • FV : Rs. 10/-
  • Issue Size: Rs 1500 crore (Entirely Offer for Sale)
  • No. of shares: 43,227,665 – 40,983,606
  • Issue Breakup: QIB 75%, Retail – 10%, NII 15%
  • Bid lot: 40 shares

Anchor Book

KFin Technologies IPO raised Rs 650 crore from 44 investors as part of the anchor book. Anchor investor include names like ASHOKA INDIA EQUITY, GOLDMAN SACHS, IIFL INDIA, NIPPON LIFE INDIA MF, AXIS MUTUAL FUND etc. Out of the total allocation of 18,442,623 Equity Shares to the Anchor Investors, 6,967,120 Equity Shares (i.e. 37.78% of the total allocation to Anchor Investors) were allocated to 8 domestic mutual funds through a total of 17 schemes. Some of the anchor investors include:

About KFin Technologies

  • The Company was incorporated as ‘‘KCPL Advisory Services Private Limited’ on June 8, 2017. General Atlantic Singapore Fund Pte. Ltd. (GASF) is the Promoter of the company.
  • In November 2018, RTA business of Karvy Consultants Ltd (“KCL”) was demerged into the company on a going concern basis pursuant to the Scheme of Amalgamation and GASF acquired 83.25% of the Equity Share capital. The CP Group (Rajat Parthasarathy, C. Parthasarathy, C. Parthasarathy-HUF and Compar Estates and Agencies Pvt Ltd) continue to hold 16.75% of Equity Share capital).
  • KFintech 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 provide several investor solutions including transaction origination and processing for mutual funds and private retirement schemes in Malaysia, Philippines and Hong Kong.
  • KFintech provides a wide array of investor and issuer solutions including omni-channel transaction origination and processing, channel management, which is mapping of mutual fund schemes of AMCs to distributors selected by the AMCs and related distributor management, including brokerage computation and channel servicing which includes brokerage pay-out, query solution and GST compliance assistance, customer onboarding with integrated KYC, unit allocation and redemption, reporting and compliance checks on a real time basis.
  • Their platform provides core registry and transfer agency services to the clients such as folio management and processing of corporate actions, as well as several digital tools such as a virtual online registry ‘KaRISMA’, an insider trading management platform, ‘Fintraks’, an online e-voting software, ‘e-Voting’, a mobile based platform allowing shareholders to view their investments across equity and bonds,‘KPrism’, an initial public offering bidding platform, ‘Pushpak’, a video conferencing and e-voting platform, ‘eAGM’ and a platform for data security, ‘eVault’.
  • As of September 30, it was India’s largest investor solutions provider to mutual funds, based on the number of AMC clients. The company provides services to 24 out of 41 AMCs in India, thus having 59% market share based on this number.
  • They are one of the 3 operating central record keeping agencies (“CRAs”) for the National Pension System (“NPS”) in India as on September 30, 2022.
  • KFintech is servicing 18 AMC clients in Malaysia in addition to 3 clients in Philippines and HongKong as on September 30, 2022. In addition, they have signed 2 new AMCs in Malaysia and 1 AMC in Singapore that are yet to launch operations as on September 30, 2022.
  • General Atlantic owns a 72.51% stake in the company. Kotak Mahindra Bank owns 9.86 % of the company, while Compar Estates and Agencies hold a 10.86% stake.
Kfintech: KFin Technologies launches its new brand identity, Marketing &  Advertising News, ET BrandEquity

KFin Technologies IPO: Financials

Particulars / (₹ Cr)H1FY23H1FY22FY22FY21Fy20
Revenue from Operations 348.77290.9639.51481.14449.87
Revenue Growth (%) 19.89%– 32.92%6.95% 
EBITDA  138.5132.69293.91217.45164.02
EBITDA Margin (%) 39.15%45.22%45.53%44.72%36.03%
Profit before Tax 110.6690.8820467.5118.51
Profit for the period 85.3567.8148.55-64.514.52
Net Profit Margin (%) 24.47%23.31%23.23%-13.41%1.01%
Share Capital 167.57150.84167.57150.84150.84
Net worth 736.72269.95644.34346.4409.58
EPS – Diluted (₹) 5.054.49^ 9.36-4.280.28
RONW (%)12.36%22.00%29.99%-17.07%0.97%
Post Issue share Cap167.57
FV in Rs. 10
IPO price366
EPS post IPO FY23 ann10.19
PE 35.9
Market Cap Rs. Cr. 6133
Market Cap/Sales8.59

Peers: Comparison: KFin Technologies

CAMS and KFin are the two qualified mutual fund RTAs in India and both cater to Domestic MF, AIF and Wealth and NPS.

CompanyFVCMPRevenue Fy22EBITDA% H1FY23  PAT% H1FY23NAV P/E RoNW 
KFintech Technologies10336639.5139.10%24.10%38.4535.9 29.99
Computer Age Management 102,208909.6744.10%28.20%132.4339.749.32

Assessment: KFin Technologies IPO

  • Investor cum promoter General Atlantic is trimming its 74.4% stake to 49.9% via the OFS.
  • KFin Technologies downsized its IPO from earlier planned Rs 2,400-crore IPO to Rs 1,500 crore.
  • KFin Technologies has a 31% market share in Indian mutual fund AUM. The remaining 69% share is by CAMS.
  • Former promoter Mr. C Parthasarathy’s 14% stake in the company is subject to non-disposal encumbrance by the regulator.
  • KFin Technologies issued shares (representing 9.98% stake) to Kotak Bank on 10 Nov 2021 at Rs. 185.35 per share.
  • Further General Atlantic sold 1.5% stake as late as end Nov 2022, at Rs. 389 per share.
  • In 2022, KFin technologies acquired Bengaluru-based IT product company Hexagram Fintech. Hexagram will now be a wholly-owned subsidiary of KFin technologies and would empower it to offer fund accounting and reconciliation solutions & expand its international footprint.
  • KFin Technologies serves 3 of the top 10 India asset management companies i.e. Nippon, UTI, Axis MF, CAMS serves 7 of top 10 AMC.
  • As on September 30, 2022, they hold a 46% market share based on the market capitalization of NSE 500 companies in India’s issuer solutions space. As on September 30, 2022, they serve more than 5,051 listed and unlisted corporates with 10.77 crore issuer solutions folio out of a total of 17.29 crore folios. They also had a 40% and 29% market share based on number of mainboard initial public offerings handled in Fiscal 2022 and 6 months ended September 30, 2022, respectively.
  • Share of KFin in overall mutual fund folios has increased from 42.5% in FY2021 to 47.2% in H1Fy23. In this period, the share of CAMS in overall mutual fund folios went down from 57.5% to 52.8%
  • CAMS derived~90% of its revenue from MF business vin H1FY23. KFin has more diversified revenue mix with Mutual Fund business accounting for 67.7% of revenues and other businesses at 32.3%.
  • Kfin also has international presence while CAMS has only domestic presence. Share ogf international business for Kfin is ~15%,
  • As on June 30, 2022, out of 60 AMCs in Malaysia across wholesale funds, unit trust funds and private retirement schemes, KFin Technologies are servicing 18 AMC clients in Malaysia and three clients in Philippines and Hong Kong.
  • Revenue has grown at a CAGR of 19.2% over FY20-22.
  • Revenue contribution from their newer businesses such as alternatives and wealth management solutions, pension services, fund accounting and reconciliation services under their international and other investor solutions and international investor solutions increased from 6.98% in FY20 to 8.65% in H1FY23.
  • P/E ratio is ~35.9x based on annualized FY23 earnings. CAMs trades at 39.7x but has better margins and share of business.
  • P/B ratio on post issue BV value and P/B is ~ 7.5x. For CAMS P/B is ~17x.
  • Company has good scope for growth.
  • KFin Technologies has asset-light business model.
  • At this point of time, Iam not sure if I should subscribe to KFin Technologies IPO though it could prove to be a good long term scrip and I may add it at some point of time if it comes below IPO price or even otherwise. Recent mainboard listing offers little comfort at this stage. However will go by QIB response to the IPO which may become clear on last day.
  • Please do your own diligence.

Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.

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