Motilal Oswal Financial Services Ltd plans expansion, to enter capital markets

Motilal Oswal Financial Services Limited ("MOFSL"), a financial services company focused on wealth creation for all its customers such as institutional and corporate clients, HNI and retail customers, proposes to expand its financing activity and to strengthen its balance sheet as also to infuse funds into subsidiaries to support its growth plans.

Its services and product offering includes retail wealth management (securities broking, commodities broking), institutional broking, investment banking as well as venture capital advisory For ease of administration and regulatory compliance, some of its business activities are carried on through its subsidiaries

MOFSL is the holding company of Motilal Oswal Securities Limited (MOSL-broking business), Motilal Oswal Commodities Brokers Pvt. Ltd (MOCB-commodity business), Motilal Oswal Investment Advisors Pvt. Ltd (MOIA-investment banking business) and Motilal Oswal Venture Capital Advisors Pvt. Ltd (MOVC-venture capital advisory).

Last year private equity investors New Vernon Private Equity Limited and Bessemer Venture Partners Trust bought a 9.47% stake in the company for Rs. 518.9/- per share (the face value per share being Rs.5/-).

Two of its promoters , Mr Motilal Oswal and Mr Raamdeo Agarwal, are qualified chartered accountants and experienced professionals in the financial services industry with significant experience. MOFSL is co-promoted by Passionate Investment Management Private Limited.

Motilal Oswal is an established brand among retail and institutional investors in India. It’s registered retail customer base exceeds 200,000 which it services through 1160 Business Locations spread across 363 cities . It is also empanelled with 240 institutional clients including 150 FII clients. In 2005 and 2006 Asiamoney brokers poll, awarded it the Most Independent Research Brokerage amongst Hedge Funds. Its research team of 28 analysts tracks 208 companies in 25 sectors and 5 analysts covering 18 commodities.

In less than a year the investment banking business has closed 7 transactions and has another 30 mandates in hand. The venture capital advisory business was appointed as the advisor of a private equity fund: the India Business Excellence Fund, which was launched with a target of raising US$100 million. In its first closing, in December 2006, the Fund obtained commitments of US$37.15 million.

Motilal Oswal Financial Services Ltd proposes to infuse funds into MOSL and in MOCB in the form of a subscription for their equity shares, unsecured loan or any combination thereof. Such capital infusion will help strengthen their respective balance sheets and thus enable them to increase trading volumes in the equities and commodities market. MOFSL provides a financing facility to its retail broking customers. MOFSL proposes to enhance this financing facility.

To fund its expansion plans, MOFSL proposes to enter the capital market with a public issue of 2,982,710 equity shares of Rs. 5 each at a premium ("Issue") through a 100% book building process. It has filed Draft Red Herring Prospectus with SEBI for this purpose. Citigroup Global Markets India Pvt. Ltd is the BRLM for the issue. For the nine months ended December 31, 2006, the company’s consolidated revenue and net profit was Rs. 2,696.95 million (US$61.14 million) and Rs. 496.24 million (US$11.25 million), respectively.

Investors should note that an investment in equity shares involves a high degree of risk and for details relating to the same, see the section titled ‘Risk Factors’ of the Draft Red Herring Prospectus before making an investment decision.

The Company is proposing this Issue in India, subject to market conditions and other considerations, and has filed a Draft Red Herring Prospectus with Securities and Exchange Board of India (SEBI). The Draft Red Herring Prospectus will be available on the website of SEBI at www.sebi.gov.in

Source : Equity Bulls

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