Computer Age Management Services (CAMS) initial public offering opens for subscription today. The Rs 2,244-crore public issue does not have any fresh issue; it has only an Offer For Sale of existing shares by NSE Investment — a subsidiary of the National Stock Exchange — which is selling its entire 37.48% stake in the company. Great Terrain Investments, the promoters of CAMS, is a Warburg Pincus subsidiary. The promoter group has already sold 12.5% equity stake in pre-IPO deals to SBI MF, ICICI Pru MF, HDFC MF, SBI Life, IIFL AIF, Acacia Partners, Ashoka Trust, Edelweiss AIF, according to IIFL Research. The promoter group will not sell any further stake in the IPO, and will hold a 31% equity stake in CAMS, against the pre issue 43.5%.

The issue, which opens for subscription today, will remain open for subscription till Wednesday, 23 September. The price band for the issue has been fixed at Rs 1,229-1,230 per share. Investors can bid for shares in a lot of 12 equity shares and multiples thereafter. The issue will not see CAMS receive any funds, but will only see NSE Investment walk away after selling its stake. The issue has 90 lakh shares reserved for Qualified Institutional Buyers (QIB), 27 lakh shares for Non-Institutional Investors (NII), 63 lakh shares for Retail investors, and 1.82 lakh shares for Employees.

Anchor investment

Prior to the IPO opening for subscription, 35 anchor investors pushed in Rs 666.56 crore into the issue. 17 foreign portfolio investors, 13 domestic mutual funds, 3 insurance companies, and 2 alternate investment funds were part of the anchor book allocation. Some of the foreign investors include, HSBC, Abu Dhabi Investment Authority, Fidelity Investment Trust, Goldman Sachs, Govt. of Singapore, Nomura Funds Ireland Public Ltd Company, Amundi, Generation IM Fund Pari Washington India, and WCM International.

Industry dominant player

Serving the Mutual Fund industry as a registrar & transfer agency (RTA) service provider, CAMS is a dominant player in the space. The company controls 70% of the market and counts 16 of the 41 mutual funds in India as its customers. These include, SBI Mutual Fund, HDFC Mutual Fund, ICICI Prudential Mutual Fund, Aditya Birla Sun Life Mutual Fund, Kotak Mahindra Mutual Fund, among other top industry players. IIFL Research shows that the total AAUM of these mutual funds was at Rs 17.4 lakh crore.

Subscribe or not?

With a market dominating position, CAMS is an industry leader. “At a higher price band, CAMS valued at 35(x) FY20 P/E has leadership position, zero debt, healthy cash position and high return ratios,” said LKP Securities in a note. IIFL Securities said that at the issue price CAMS is at a 10-15% discount to listed AMCs, Exchanges and Depositories. Brokerage and research firm Motilal Oswal, Yes Securities, Motilal Oswal, and Geojit Financial Services all have a subscribe rating on the IPO.