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Friday, April 27, 2007

Looking to raise Rs 160-200 cr via IPO: Motilal Oswal

Motilal Oswal Financial Services is coming out with a public issue of 29.8 lakh shares. Motilal Oswal, CMD of Motilal Oswal Financial Services says that this move is to expand their existing business - more branches, better technologies, more businesses and more acquisitions.

Excerpts from CNBC-TV18's exclusive interview with Motilal Oswal:

Q: Could you put it out for us, how much are you looking to raise and what are you going to use the money for?

A: We have filed our DRHP with Sebi and we basically are issuing 10.5% of our equity in public offering, listing will be depending on all the other formalities and timing about the market.

Q: Roughly how much are you looking to raise though?

A: Roughly it will be anywhere between Rs 160-200 crore.

Q: Could you lay out what exactly are you going to use this money for?

A: This is basically for expanding to our existing business, which is more branches, better technologies, more businesses and might be few acquisitions as and when it will happen.

Q: Could you walk us through the kind of financials each one of your subsidies are clocking at this point in time and the kind of revenue mix you are targeting going forward in FY08 and forward years?

A: I cannot talk about the futuristic numbers because we have already filed our DRHP with Sebi.

Q: If you can shed more light on the current revenue mix?

A: In the first nine months, we have done something around 250 crore worth of revenues and 50 crore PAT.

They are different businesses - like we have got wealth management business, we have got investment banking business, we have got institutional business, we have got private equity fund management as a business. So I think different revenue stems from all these businesses.

Q: By when are you hoping to price this issue?

A: I think it will happen anywhere in the month of July.

Q: On the ballpark that you have laid out, the priceband could be anywhere between 500 and 700 in your initial calculations with your merchant bankers?

A: I would say that last year we have put our equity with the private investors where the firm was valued at around USD 300 million. So let us see how much valuation the market can give us.

Q: Can you highlight the kind of risk that entails in all the businesses that you operate at this point of time because there is a high core relation with the movement in the stock markets, how do you look to mitigate or hedge that risk?

A: Yes, you are right, we are in the business, which is too much cyclical. But the strategy is basically to de-risk by having more or more products and different businesses. In last couple of years, we have added investment banking into our business and we also have added private equity fund management in our business.

So to that extent, I think we are de-risked from the predominant brokerage business, which we were in, three years before.

Q: What kind of margin are you seeing in all kind of subsidiaries at this point in time including the investment banking subsidiary, which has come by recently?

A: Operating profit depends upon different businesses like investment banking and institutional business, which are more people driven; there margins will be higher versus wealth management business, it is a bit lower because of huge cost of operations.

IPO WATCH
Mot Oswal Fin Svcs
-Issue of 29.8 lakh shares (FV Rs 5)
-Issue constitutes 10.5% of post-issue capital
-Promoter holding to go down to 69% post issue

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