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Aditya Birla Capital closes 5 percent lower on market debut

The listing marks the culmination of the Aditya Birla Group's plan to hive off its financial service businesses through a composite corporate restructuring

Published: Sep 1, 2017

The financial markets generate a lot of number on a per second basis. There are people who have made it a profession to convert this information into trends, buy-sell signals, charts and pivot tables. Over the last 18 years of financial journalism, I have realised that every number has a story to tell. And these numbers as a trend normally never lie. I am forever looking for these trends.

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Shares of Aditya Birla Capital Limited (ABCL), the financial services business of the Aditya Birla Group, listed at a price of Rs 250 apiece on the National Stock Exchange (NSE) on Friday. The shares were down 5 percent, hitting the lower circuit in early trade, at Rs 237.5 and closed the day at the same price.

Now, if you missed the IPO, that’s because there wasn’t any! The listing of ABCL, a subsidiary of Grasim Industries, is one of the few instances of a company going for a listing by skipping the initial public offering. The shares are also part of the trade-to-trade segment where intraday trading is not allowed.

The listing also marks the culmination of the Aditya Birla Group’s plan to hive off its financial service businesses through a composite corporate restructuring. Aditya Birla Nuvo, which earlier owned the financial businesses, and Grasim served as the holding companies of the group’s businesses. The two were subsequently merged and now the financial business has been spun off as ABCL.

Investors in Grasim were given seven equity shares (of Rs 10 each) of ABCL for every share they owned. According to the prospectus, Grasim, the holding company, “issued and allotted to each member of Aditya Birla Nuvo, 15 equity shares of Rs 2 each credited as fully paid up for every 10 equity shares of Rs 10 each held.” It means AB Nuvo investors will get three shares of Grasim for every share held.

The swap ratio, ensures that post issue, Grasim will hold 55 percent of ABCL, while the public will hold 25.6 percent.

For the year ended March 31, 2017 ABCL had a total income of Rs 58,859 crore and a net profit of Rs 6,912 crore. The company has a return on equity of 10.5 percent or a total networth of Rs 65,954 crore.

The company has presence across business sectors including NBFC, asset management, life insurance, health insurance and wellness. The company is also involved in housing finance, private equity, general insurance broking and broking.

ABCL has  a  presence  in  more  than  400  cities  in  India  through  over  1,300  points  of  presence  and  over 142,000 agents and channel partners. Some of the main companies in the group are Aditya Birla Finance, Aditya Birla Housing Finance, Aditya Birla ARC and Birla Sun Life Asset Management Company.

The asset management company is one of the oldest private sector mutual fund companies in India. Today, it is the fourth largest asset management company in terms of assets under management at Rs 2,10,700 crore and growing at a very fast pace.

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