Abhishek Bansal, Chairman -; Managing Director, Abans Group

12 Dec 2022 , 10:20 AM

Help us understand the company’s business model.

Incorporated in the year 2009, Abans Holdings Ltd is the holding company of financial services arm of the group. Amongst other it includes:

• Lending business which is operated through an RBI registered NBFC.
• Global institutional broking business in equities, commodities and foreign exchange
• Asset management services
• Investment advisory services and wealth management services to corporate, institutional and high net worth clients.

The above business is carried out across the globe through our subsidiaries companies which are located in UK, Singapore, UAE, China, Mauritius and India.  Company’s activity is mainly divided into three segments namely finance business, capital business, agency business and others.

Which are the listed peers of the company? How does the company stand out from them?

The listed peers of our company are Edelweiss Financial Services Ltd., Geojit Financial Services Ltd and Choice International Ltd. Our key differentiators compared to our peers are

• We are a net-debt free company.
• We are among the only service provider who holds membership right of various exchanges across the globe (directly or indirectly) through our subsidiaries.
• Further, one of our subsidiary company in UK has received the third party payment license from FCA, UK. This enables us to be a platform for accepting and remitting payments in multiple currencies from prospective clients across the globe. The opportunity is to earn a transaction fee per transaction and also a foreign exchange spread for payments in multiple currencies. We will be competing with banks who offer this service however at much higher costs. This will contribute to our net income in a large way.
• One of our subsidiary company namely Abans Global Limited is one of four brokers who are empanelled by IFSC (Gift City). This gives us the ability to on-board qualified institutions in the IFSC jurisdiction who want to participate in capital markets around the globe. As Abans Global Limited already has the memberships of various global exchanges, this will add to the brokerage income of the group in a significant way.

Share with us the key expansion project of the company highlighted as one key area of use of IPO projects
 
The objects of the net fresh issue is to raise funds for:
 

• Investment in our NBFC Subsidiary (Abans Finance Pvt. Ltd.) for financing the augmentation of its capital base to meet its future capital requirements. This money will be utilized towards expansion of existing finance business. 

 
Focus on monetizing the third party payment license in the UK to become a global platform for remittances. The increased visibility will help us increase the agency fee income we earn through asset management.
 
What are the company’s key growth strategies?

• Use of technology to create greater scalability
• Expansion existing line of business into newer geographies
• Augment our fund based capacities to ensure return on capital

 
 This can be achieved by leveraging our strengths which are listed below :
 

• An integrated financial services platform
• Strong human capital and organizational culture
• Global exposure providing innovative financial products
• Strong relationships with clients and market participants
• Standardized operating procedures and efficient use of technology

 
Share with us a snapshot of the company’s financial profile and key strengths thereof.

Consolidated Financial Position of Assets & Liabilities

Particulars	31.08.2022	31.03.2022	31.03.2021	31.03.2020
Share Capital	9.27	9.27	9.27	3.09
Reserves	668.90	621.84	552.68	496.46
Non Controlling Interest	108.75	104.52	98.13	90.48
Net Worth	786.92	735.63	660.08	590.02
Borrowings	76.92	85.90	267.39	318.79
Other Liabilities	366.88	347.16	254.05	304.16
Total Equity and Liabilities	1,230.72	1,168.69	1,181.51	1,212.98
Property, Plant & Equipment	13.85	13.92	14.58	15.54
Loans & Advances	587.71	526.28	505.08	532.20
Debtors	225.83	297.92	342.73	433.49
Cash & Bank	162.62	141.81	208.57	84.28
Others	240.72	188.76	110.55	147.46
Total Assets	1,230.72	1,168.69	1,181.51	1,212.98

 
What are the margin drivers of the company?
 
Finance business
 

• With the infusion of funds raised through IPO we expect our NBFC loan book to grow by at least 40-45%. Considering the scale of operation additional business will add to bottom line in higher proportion as compared to the cost of additional business.

 
Payment processing business

• Provides an opportunity to earn a transaction fee per transaction and also a foreign exchange spread for payments in multiple currencies. We will be competing with banks who offer this service however at much higher costs. This will contribute to our net income in a large way.

 
Fees from AUM

• With growing Indian economy, household savings have been shifting from physical assets to financial assets and within financial assets, from bank deposits to securities. The core DNA of Abans Group is asset management. The group has been devising various innovative products for customers. The group will earn management fee income as the assets under management grow both in India and globally.

 
Returns from Capital business

• Considering our human capital strength, we will be able to earn superior risk adjusted returns on our excess capital fund which is one of the core business area of our group. This will be achieved by investing in low / medium risk strategies, maintaining positions in physical as well as exchange traded commodities and other instruments. 

 
What are the key macro opportunities for the company?

1. We have received license for payment processing from the FCA, UK. In the payment processing space we have ample opportunity to earn transaction fees and FX spreads in multiple global currencies.
2. We have opened branch of our subsidiary Abans Global Ltd in GIFT City, Gujarat. We are one of the four brokers in the GIFT city having membership of global exchanges which will help us to onboard the clients in the GIFT city to trade in global exchanges.
3. Moving forward, the latent credit demand of an emerging India will provide NBFCs with a chance to bridge the gap, particularly in the sectors where traditional banks were hesitant to serve. As the estimates indicate, more than 50 percent of micro, small and medium enterprises (MSMEs) are not able to access formalized credit. Additionally, improving macroeconomic conditions, higher credit penetration, enhanced consumption and disruptive digital trends will give enormous opportunities for NBFCs credit to rise at a robust rate of 7-10% in the coming years. The infusion of new capital and having exposure to all the above sectors will allow us to drive growth in this business.

 
What are the key challenges the company is facing? How are you mitigating the same?

We operate in a highly regulated environment which often changes based on policy decisions. A key challenge is to keep up with the changes and constantly evolve the policies and processes of the group to stay compliant as well as competent.

Our success depends in large part upon our qualified personnel, including our senior management, directors and key managerial personnel and our ability to attract and retain them when necessary. A key challenge is to retain this talent and continue to motivate them to work in a highly regulated and ever changing business landscape. We do this by ensuring they are upskilling themselves by providing them relevant training. We also have an ESOP program under discussion which will keep them motivated in the long term.
 
How will you grow your customer base across the country?

The core DNA of Abans Group is its ability to manage assets. We provide a variety of products in the investments space for a diversified risk profile. Our structured products, the global arbitrage fund in Mauritius, our global brokerage fund houses as well as our alternative investments offerings are the key drivers of growing our customer base globally. We have grown our investor customer base exponentially in the last 3 years and I feel this trend will continue. The financial services industry is a one which provides you growth once you garner the trust of the investors. The public issue will help us with the visibility the group needs to capture the relevant audience in the market.