Issue price plays a key factor for listing to be successful: Anand Rathi

Wealth management services firm Anand Rathi Wealth Limited is slated to list on Tuesday, December 14, after its IPO was subscribed 9.78 times. Its co-founder and vice-chairman Pradeep Gupta spoke to DH’s Veena Mani on the timing of the IPO, and wealth management among other issues. Excerpts from the conversation:

Your listing comes at a time when the markets are extremely volatile. We have seen Paytm’s IPO tepid listing in the recent past. Do you think the market debut could have been timed differently?

It is a fact that primary market sentiments are down after Paytm listing and secondary markets have reacted to the Covid scare. But we must also understand that there are other factors like the company’s fundamentals, etc. Anand Rathi Wealth Management is likely to grow by 25% year-on-year. And as a wealth management firm, we always look at the long-term growth perspective.

Moreover, issue price plays a key factor for the listing to be successful. Our issue price between Rs 530 to Rs 550 per share is reasonable and we think we can add value to our investors, hence it is a good bet.

Anand Rathi Wealth Limited’s shares have been widely traded in the unlisted/grey market at a premium. Do you think that could help boost your listing price?

First of all, let’s understand that the grey or unlisted market is beyond anybody’s control. It probably gives you an indication as to what kind of interest there could probably be. Our IPO has been over subscribed with HNIs, institutional investors and QIBs subscribing well. This shows that investors are confident in our company. We are not concerned about what is happening in the grey market. One should never just go by the grey market premium as the parameters for that is not clear.

The only logic I see in the grey market premium (GMP) is that people are willing to pay for a particular company. At the end of the day, actual demand has to come on the listing day and post it, too.

You spoke about GMP and what it signifies. As a wealth management firm, do you get questions from your clients and how do you read this phenomenon and investing in the unlisted market.

We only talk about value proposition as that is what our clients want. Their wish is to beat inflation and a lot of them are high net-worth individual (HNI) clients.

As a firm, our philosophy is very clear to discourage our clients from investing directly into equity market and instead, ask them to take the mutual funds route. Even for our IPO, we did not go to our clients asking them to buy. But they’ve seen our services and have bought it because of the belief in our business.

What is the role of your two subsidiaries companies?

So far we have not added the valuation of the two subsidiaries in Anand Rathi Wealth Management’s valuation. We will include them only when they turn profitable. One of them has reached the break-even point.