Mumbai: Domestic stock brokerage ICICI Securities, which will launch its initial share sale in a week, plans to reduce its revenue volatility by increasing its distribution business through offering new products and services.
ICICI Securities, an arm of ICICI Bank, has fixed a narrow price band at Rs 519 to Rs 520 per equity share for its initial public offer (IPO), to raise little over Rs 4,000 crore. The public issue will open on March 22 and close on March 26.
Addressing the media here, ICICI Securities managing director and CEO Shilpa Kumar said that "Sixty percent of its revenues are from broking and about 10 percent from investment banking. Of the remaining 30 percent, half comes from mutual fund distribution and rest from third-party products."
"Noting that as investors seek institutional advice, the firm as a technology-based distributor is constantly looking to expand its footprint," she added.
ICICI Securities plans to reduce revenue volatility by increasing contribution from distribution through offering new products and services and would increase focus on products with recurring revenues and improve customer adoption of SIPs.
The brokerage also plans to increase focus on products with recurring revenues and improve customer adoption of systematic investment plans (SIPs) besides reducing its revenue volatility by increasing its distribution business.
It strategically plans to expand its financial product distribution business through cross-selling third-party financial products.
"Significant retail customer base presents significant potential to cross-sell third-party financial products and we will explore expansion in Tier-II and Tier-III cities to benefit from increasing financial investments from such cities," Kumar said.
The brokerage plans to maintain its leadership position in equity capital markets products and strengthen the advisory business.
"We will focus on distressed-asset transactions, which we believe offer a unique macro opportunity and build upon the ICICI Bank referrals," she said.
Moreover, the brokerage would continue to invest in technology as well as strengthen the underlying IT infrastructure to improve processing speeds, increase integration and inter-operability.
Talking about the IPO, ICICI Bank chief Chanda Kochhar said, "as far as the timing of the public issue is concerned, we clearly indicated that we as a group set out on a journey that gradually, as these companies reach a size, in order to unlock value, in order to establish valuation benchmarks, we will one by one be listing the entities".
ICICI Bank would offer over 7.72 crore equity shares in ICICI Securities through the offer for sale route. The proceeds from the public issue will go to the bank.
"As the business (of ICICI Securities) continues to grow, we have invested capital in the past and we will continue to do so, Kochhar said adding that the brokerage is a very low capex business.