The wealth management unit of IIFL Holdings Ltd., which the financial services group spun off to unlock value, listed at higher-than-estimated price. The stock was locked in upper circuit of 5 percent to close at Rs 1,270.50 a share.
IIFL Wealth Management Ltd., India’s third-largest manager of money for the rich with Rs 1.36 lakh crore assets, started trading on its market debut at Rs 1,210 apiece.
Kotak Securities had pegged the wealth manager’s fair value at Rs 1,050 per share, valuing the business at 2.7 times its estimated September 2021 book value. Antique Broking had estimated it between Rs 800 and Rs 1,000 piece.
IIFL Wealth’s strong client franchise in the Indian ultra-high-net-worth segment, an innovative, diversified product offering and superior execution, make it a good play in the niche wealth management space, Kotak Securities analyst Nischint Chawathe wrote in a note
Kotak identified three risks factors to its target: sustaining inflows in the backdrop of volatility in capital markets; improving commissions in the new advisory mode; and alignment of employee incentives to lower but more stable levels.
Earlier this year, IIFL Holdings had received the nod to carve out three entities—IIFL Wealth, IIFL Fiance and IIFL Securities. Under the arrangement, for every seven shares of the listed IIFL Holdings, shareholders were to get seven shares of IIFL Finance and IIFL Securities each, and one share of IIFL Wealth.
Last month, IIFL Wealth agreed to acquire L&T Capital Markets, a wholly owned subsidiary of L&T Finance Holdings Ltd., for Rs 250 crore to expand its wealth management services for individual and institutional clients, particularly the rich families.