IPO Alert: What to expect when Prudent Corporate Advisory goes public

Financial product distributors play a critical role in the market ecosystem in India. The country’s retail financial products distribution industry grew at a CAGR of around10% from 2016 to 2021 and reached ₹161 trillion by March 2021.

The retail mutual funds category posted the highest CAGR of over 22% amongst the other retail financial products categories and touched ₹17 trillion as of March 2021.

Prudent Corporate Advisory Services Ltd recently filed draft papers with the markets regulator to raise funds through an initial public offering. The IPO consists of an offer for the sale of 8.55 million shares by existing shareholders and promoters.

Prudent Advisory will not directly receive any proceeds from the offer and all the proceeds will go to the selling shareholders, in proportion to the shares sold by them.

Wealth Management

Prudent Corporate Advisory is one of the largest independent retail wealth management service providers in India, excluding banks and brokers. Its services are offered through FundzBazar, PrudentConnect, Policyworld, WiseBasket, Prubazar, and CreditBasket.

The company’s primary business is the distribution of mutual funds. It also distributes other financial products such as insurance, portfolio management schemes, alternative investment funds, corporate fixed deposits, bonds, unlisted equities, stockbroking solutions, etc.

The Gujarat-based company provided wealth management services to 772,899 unique retail investors as of March 2021, through 17,583 mutual fund distributors/independent financial advisors on its business-to-business-to-consumer platform. It has branches in 105 locations across 20 states in India.

Key Financials

In fiscal 2021, total revenue from operations was at ₹2.86 billion against ₹2.34 billion a year ago. Net profit for the period stood at ₹453 million versus ₹278.5 million last year.

Prudent Advisory derives its revenue from commission and trail income, which is a recurring periodic payment. However, with growing technology and an increase in ease of investments, the company’s existing customers and potential clients will not find it valuable to invest through a third-party platform. The investors may choose to invest in funds directly, thereby reducing or eliminating the company’s involvement in the process.