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Background
Allianz Securities is a 12-year-old investment bank of repute with extensive expertise in investment banking, corporate finance & restructuring and fixed income product & service offerings. Allianz Securities is Sebi-approved Category-I Merchant Banker, underwriter and portfolio manager. The company also undertakes distribution of financial instruments like mutual funds, bonds, insurance, etc. It has an active network of associate/sub broker of 3500 spread across India. Very recently, through its subsidiaries Almondz, it forayed into equity and commodity broking. The promoters hold 44.7% equity of the company.
Investment Rationale
Established player in equity market
Allianz Securities was ranked 16th among private investment bankers in issue management for period April-2005 - March 2006. It offers the entire gamut of merchant banking services ranging from IPO issuances, private placement, fund syndication and M&A deals. Among its assignments were the public issue of Jai Prakash Hydro, public issue of GIPCO, public issue of FCS Software and public issue of Gayatri Projects. It also handled the rights issue of Mawana Sugars, Gujarat Alkalies, Spicejet, etc. >
Active in debt market
The company is very active in the debt market. It has been associated with borrowing of over Rs 50,000 crore (US$ 11 billion) representing almost a fifth of the funds mobilized in the domestic debt market. It has strong client base comprising of provident funds, pension funds, mutual funds banks, insurance companies, etc. It has seen a steady rise in fixed income mobilization from Rs 6,900 crore or 46 issues in FY02 to Rs 19,800 crore or 52 issues in FY06.
Rapid strides in distribution business
Allianz has a network of 17 branches and 3,500 empanelled brokers/sub-brokers. It has made rapid strides in the distribution business and is active in insurance, mutual funds, bonds, etc. Distribution income has been gaining strength, rising from Rs 10.6 crore in FY05 to Rs 24.8 crore in FY06 and contributing almost 50% of revenues in FY06. Considering an average yield of 2%, Allianz Securities distributed Rs 1,200-1,300 crore worth of financial instruments.
Foray into broking
To expand its product offering and increase revenue stream, Allianz has ventured in the broking business (equities and commodities) through its wholly-owned subsidiary ‘Almondz Capital Market’. Company will initially service institutional clients. Thereafter, it aims to venture in the retail space. With its entry into the broking business, Allianz Securities has become a complete financial boutique offering a wide gamut of services.
Outlook
Strong macro economic factors, rising industry confidence and growing investment capex creates a healthy environment for merchant bankers like Allianz Securities. We are witnessing a healthy business environment where appetite to raise funds through the equity and debt issue has risen manifolds and players like Allianz Securities are citing huge business opportunity. The company has a rich pipeline with almost Rs 600-700 crore of IPOs where it is mandated as a Book Running & Lead Manager. Equivalent amount of mandates are under execution in the private placement and M&A space. We maintain a positive outlook on business in coming quarters.
We believe that, Company is amongst a handful of financial boutique offering full range of financial products and revenue size in excess of Rs 50 Crore. |
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