What you must know about Money Fair IPO?

About Money Fair (Akiko Global Services Ltd)

Akiko Global Services Ltd (Money Fair) was incorporated in the year 2018 as a distributor of financial products like credit cards and loans. It largely focuses on asset products on behalf of the banks and other non-banking finance companies (NBFCs). The company has been in the business for over 6 years. It acts as the last mile connectivity agent for these banks and financial institutions. The company, Akiko Global Services Ltd, is also better known by its front end platform, Money Fair. This is a technology platform that uses advanced algorithms to collect and analyse data to assess creditworthiness. It provides insights for easy comparison of offers and increases the chances of securing a loan or a card for customers. The entire platform is designed from a customer point of view. The company currently has about 418 employees on its rolls. 

Highlights of the Money Fair IPO

Here are some of the highlights of the Money Fair IPO (Akiko Global Services Ltd) on the SME segment of the National Stock Exchange (NSE). 

•    The issue opens for subscription on 25th June 2024 and closes for subscription on 27th June 2024; both days inclusive.

•    The stock of the company has a face value of ₹10 per share and it is a book built issue. The book building price band for the IPO has been set in the range of ₹73 per share to ₹77 per share. Being a book built IPO, the final price discovery will happen in the above price band only.

•    The IPO of Akiko Global Services Ltd (Money Fair) has only a fresh issue component and no offer for sale (OFS) portion. While the fresh issue portion is EPS dilutive and equity dilutive, the OFS is just a transfer of ownership and  hence is not EPS or equity dilutive.

•    As part of the fresh issue portion of the IPO, Akiko Global Services Ltd (Money Fair) will issue a total of 30,01,600 shares (30.02 lakh shares approximately), which at the upper band IPO price of ₹77 per share aggregates to fresh fund raising of ₹23.11 crore.

•    Since there is no OFS, the fresh issue size will also double as the overall issue. Therefore, the overall IPO size will also comprise of the issue of 30,01,600 shares (30.02 lakh shares approximately) which at the upper band IPO price of ₹77 per share aggregates to overall IPO size of ₹23.11 crore.

•    Like every SME IPO, this issue also has a market making portion. The company has set aside a total of 1,50,400 shares as quota for market inventory. Nikunj Stock Brokers Ltd has already been appointed as the market makers to the issue. The market maker provides two-way quotes to ensure liquidity on the counter and low basis costs.

•    The company has been promoted by Ankur Gaba, Richa Gaba, Puneet Mehta, Gurjeet Singh Walia, and Priyanka Dutta. The promoter holding in the company currently stands at 92.77%. However, post the fresh issue of shares, promoter equity holding share will get diluted to 66.91%.

•    The fresh issue funds will be used by the company for implementing the ERP solution, investing in mobile app for financial products, brand awareness and working capital needs. A small part of the IPO proceeds are set aside for general corporate purposes.

•    Fast Track Finsec Private Ltd will be the lead manager to the issue, and Skyline Financial Services Private Ltd will be the registrar to the issue. The market maker for the issue is Nikunj Stock Brokers Ltd.

The IPO of Akiko Global Services Ltd (Money Fair) will be listed on the SME IPO segment of the NSE.

Money Fair IPO – Key Dates

The SME IPO of Akiko Global Services Ltd (Money Fair) IPO opens on Tuesday, 25th June 2024 and closes on Thursday, 27th June 2024. The Akiko Global Services Ltd (Money Fair) IPO bid date is from 25th June 2024 at 10.00 AM to 27th June 2024 at 5.00 PM. The Cut-off time for UPI Mandate confirmation is 7.00 PM on the issue closing day; which is 27th June 2024.

It must be noted that in ASBA applications, there is no refund concept. The total application amount is blocked under the ASBA (applications supported by blocked amounts) system. Once the allotment is finalized, only the amount is debited to the extent of the allotment made and the lien on the balance amount is automatically released in the bank account. The credit of shares to the demat account on July 01st 2024, will be visible to investors under the ISIN Code – (INE0PMR01017). This allocation to the demat account is only applicable to the extent of the allocation of shares and if no allocations are made in the IPO, then no credit would be visible in the demat account.

IPO allocation and minimum investment lot size

Money Fair IPO has announced a market maker allocation of 1,50,400 shares, which will be used as inventory for market making. Nikunj Stock Brokers Ltd will be the market maker for the IPO. The net offer (net of market maker allocation) will be divided between the retail investors and the HNI / NII investors. The breakdown of the overall IPO of Akiko Global Services Ltd (Money Fair) in terms of allocation to various categories are captured below.

Data Source: Company RHP

The minimum lot size for the IPO investment will be 1,600 shares. Thus, retail investors can invest a minimum of ₹1,23,200 (1,600 x ₹77 per share) in the IPO. That is also the maximum that the retail investors can invest in the IPO. HNI / NII investors can invest a minimum of 2 lots comprising of 3,200 shares and having a minimum lot value of ₹2,46,400. There is no upper limit on what the QIBs as well as what the HNI / NII investors can apply for. The table below captures the break-up of lot sizes for different categories.

There are no upper limits for investments by HNIs / NIIs in the IPO of Akiko Global Services Ltd (Money Fair).

Financial highlights: Akiko Global Services Ltd (Money Fair)

The table below captures the key financials of Akiko Global Services Ltd (Money Fair) for the last 3 completed financial years. 

Data Source: Company RHP filed with SEBI

Here are some of the key takeaways from the financials of the company for the last 3 years; i.e., from FY21 to FY23, being the latest year. 

•    The revenues over the last 3 years have grown at a very robust clip, with FY23 revenues nearly 6.50 times the revenues in FY21. As net profit traction has picked up in the last 2 years, the net profit margins have improved from 3.76% to 11.45% in last 2 years.

•    While net margins of the company have been relatively strong at 11.45%, the margins have also shown growth traction in recent years. In addition, return on equity (ROE) stands robust at 78.36% in FY23, while the return on assets (ROA) is also strong at 40.08% in FY23. Both are up sharply from the previous two years. This can be largely attributed to the low capital and asset base in the distribution led business.

•    The asset turnover ratio or the sweating ratio has been very healthy in the latest year at 3.50X and that only gets further accentuated when you look at the healthy ROA. However, the company is in the distribution business, so the net spreads will matter a lot more than the utilization efficiency of assets.

The company has latest year EPS of ₹12.62, after adjusting for capital actions. The FY23 earnings are being discounted by the IPO price of ₹77 per share at 6-7 times P/E ratio. Even if you adjust for the sharp growth in the last 2 years and look at the valuations based on the weighted average EPS of the last 3 years at ₹7.40 per share, you are still look at valuations in the range of 10-11 times P/E ratio. The FY24 earnings for the first 10 months look to be relatively lower, but we will have to factor in the full year numbers for a clear idea.

To be fair, Akiko Global Services Ltd (Money Fair) some bring some intangible advantages to the table. It has a growing customer base and provides the last mile for banks and NBFCs, a service that will have perpetual demand. But, the big advantage would be the algorithm based technology platform (Money Fair) that can really be the engine of future growth and value if leveraged in the right context. For now, the pricing of the IPO looks very reasonable if you consider the FY23 numbers. Investors can look at the IPO from a longer term perspective and a holding period of at least one year. The investors can bet on the growing value of the technology algorithm platform as a key value driver in the future, but investors must also be prepared for cyclical risk, should the demand for financial products go through the typical down cycles.