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CAMS
CAMS
A substantial portion of the fees that they charge its mutual fund clients is calculated and charged on basis points of
the average assets under management (“AAUM”) of the funds serviced. The fee structure therefore is not directly
linked to its expenses
Management
Mr. Anuj Kumar, their Whole-time Director and Chief Executive Officer has over two decades of experience and has
been with the Company since June, 2016. Their Key Management Personnel have average work experience of over
25 years and have been with the company for over four years. Its promoter Great Terrain is an affiliate of Warburg
Pincus.
7 Facts to know
CAMS is India’s largest registrar and transfer agent of mutual funds with an aggregate market share of 69.4% based
on mutual fund Average Assets Under Management (AAUM) managed by its clients and serviced by CAMS during
November 2019.
In the last five years, the company has been able to expand its market share from 60.5% in March 2015 to 67.6% in
March 2019, based on AAUM serviced.
Some of its prominent clients include HDFC Asset Management Company (HDFC AMC), ICICI Prudential Asset
Management Company, SBI Funds Management Private, Aditya Birla Capital, and DSP Investment Managers.
In total, the company serviced INR18.7 trillion of AAUM of 16 mutual funds as of November 2019. The company
earns revenue on the basis of mutual fund AAUM of its clients.
Over the last five years, the AUM of equity mutual funds serviced by them grew from INR2,180 billion to INR6,643
billion in FY2019, representing a CAGR of 32.1%.
From handling over 98 million transactions in the financial year 2015, they handled over 313 million transactions in
the financial year 2019.
They offer an integrated and customized portfolio of services through its pan-India physical network comprising 278
service centers spread over 25 states and five union territories as of September 30, 2019. These are supported by
call centers in four major cities, four back offices (including a disaster recovery site).
The issue will be an Offer for Sale of up to 12,164,400 Equity Shares by the Selling Shareholders. The entire
proceeds from the Offer for Sale will be paid to the Selling Shareholders and we will not receive any such proceeds.
Industry
The assets of the Indian mutual fund industry have grown consistently since financial year 2000. The AUM has risen
at a CAGR of 17.4%, from ₹1.1 trillion as on March 31, 2000 to ₹23.8 trillion as on March 31, 2019. The industry’s
growth came against the backdrop of an expanding domestic economy, robust inflows and increased participation,
especially by individual investors. The mutual fund industry had 41 asset management companies (“AMCs”)
(excluding Infrastructure Debt Funds) as of March 2019, up from 32 in March 2000, after a brief drop to 28 in 2004.
The following graph sets out the trend in share of various mutual fund segments for the periods indicated – (Higher
Equity inflows can be attributed here due to higher returns in prior years/FOMO and the SIP marketing success)
The following graph sets out the net inflow of funds received by equity, debt, liquid/ money market funds and other
funds for the periods indicated – (Debt reduction due to money market crisis after IL&FS crisis)
The following graph sets out the penetration of mutual funds in India as compared to certain other countries (GDP in
USD terms has been considered for the graph below):
Investor mix of the Industry – Not only in equity, but even in MF retail investors have a bad name as the retail
participation needs to increase significantly. To put that into context there are just 2 crore unique MF investors in
India –
Indian MF industry is highly concentrated -
Immense Scope?
Market Share
Future revenue and profit are largely dependent on the growth, value and composition of AAUM of the mutual funds
managed by their clients, which may decline.
Significant disruptions in information technology systems or breaches of data security could adversely affect business
and reputation.
They experienced an attack by a Crysis/Dharma ransomware variant on the server hosting the marketing website of
its Subsidiary, SSPL, in December 2018 which caused their data to get encrypted. This attack was contained and did
not spread through SSPL’s network or that of their Company.
Their services and the fees they charge clients for certain services are subject to change if applicable SEBI rules and
regulations are amended, or new laws or regulations are adopted, which could result in an adverse effect on business
and results of operation.
There have been instances of non-compliances with certain legislations and they have also received certain warning
letters from SEBI and a show cause notice from the IRDAI in relation to certain aspects of its operations.
They compete with a number of entities that provide similar services in each of the business lines in which they
operate
Positive Triggers
According to CRISIL, with stable inflation, rising disposable incomes and growth in the GDP, gross domestic savings
and household savings are expected to rise. With higher focus on the financial savings and saving instruments, the
proportion of financial savings in household savings as well as the net household financial savings are expected to
rise during the next five years.
According to CRISIL, the nominal per capita GDP of India is estimated to be ₹142,719, for financial year 2019.
Assuming average growth of around 11% in nominal GDP over the next five years, the same is expected to grow at a
CAGR of 10.4% (financial year 2019 - 2024) to ₹230,000 in financial year 2024.
Favourable demographics. India currently has one of the largest young populations in the world, with a median age of
28 years. According to CRISIL, as many as 90% of Indians will be below the age of 60 by calendar year 2020 and
63% of them will be between 15 and 59 years. In comparison, in the calendar year 2012, the US, China and Brazil
had 74%, 62% and 78% of their population below the age of 60.
Urbanization. Urbanization is a big growth driver for India as this leads to fast infrastructure development, job
creation, development of modern consumer services and the city’s ability to mobilize savings. The share of urban
population in total population has been consistently rising over the years and stood at about 31% in 2011 and is
expected to reach 36% by 2022 thereby increasing demand.
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