KFin Technologies IPO Basis of Allotment

Our Company was originally incorporated under the Companies Act 2013 as 'KCPL. Advisory Service Private Limited' and was granted a certificate of incorporation by the RoC on June 8, 2017, The Board of our Company approved the change in the name of our Company from KCPL Advisory Services Private Limited' to "Karvy Fintech Private Limited" by their resolution dated July 22, 2017. which was thereafter approved by the Shareholders of our Company through their resolution dated July 24, 2017 and a fresh certificate of incorporation, under the Companies Act. 2013. was issued by the RoC on August 10, 2017 Pursuant to be Scheme of Amalgamation between Karvy Consultants Limited ("KCL"), Karvy Computer share Private Limited ("KCPL") and Company, all the assets and liabilities pertaining to the RTA business KCL (including but not limited to the equity investment of KCL in KCPL were demerged into our Company on a going concern Basis; and KCPL was amalgamated into our Company with effect from November 17, 2018. The Board of our Company approved the change in the name of our Company from 'Karvy Fintech private Limited' to 'KFin Technologies Private Limited' through their resolution, dated November 25, 2019, which was thereafter approved by the Shareholders of our Company through their resolution dated November 30, 2019 and a Fresh certificate of incorporation , under the Companies Act, 2013. was issued by the RoC on December 5, 2019 The Board of our Company approved the conversion of our Company from a 'private limited company' to a public limited company through their resolution dated January 8, 2022. which was thereafter approved by the Shareholders of our Company through their resolution dated January 28, 2022 pursuant to the conversion of our Company into a public limited company, the name of our Company was changed from KFin Technologies private Limited' to 'KFin Technologies. Limited', and a fresh certificate of incorporation dated February 24, 2022, was issued by the RoC For details in relation in the Scheme of Amalgamation and the changes in the name and registered office of our Company. see"History and Certain Corporate Matters" on page 258 of the Prospectus.

Our Company has filed the Prospectus dated December 22, 2022 with the RoC (the "Prospectus") and the Equity Shares are proposed to be listed on the National Stock Exchange of India Limited ("NSE") and BSE Limited (‘‘BSE") and the trading will commence on December 29, 2022.

INITIAL PUBLIC OFFERING OF 40,983,606 EQUITY SHARES OF FACE VALUE OF Rs 10 EACH ("EQUITY SHARES") OF KFIN TECHNOLOGIES LIMITED ("COMPANY" OR "THE COMPANY" OR "THE ISSUER") FOR CASH AT A PRICE OF Rs 366 PER EQUITY SHARE ( INCLUDING SHARE PREMIUM OF Rs 356 PER EQUITY SHARE) (THE "OFFER PRICE") AGGREGATING TO Rs 15,000 MILLION (THE "OFFER") COMPRISING OF AN OFFER FOR SALE OF 40,983,606 EQUITY SHARES AGGREGATING TO Rs 15,000 MILLION ("OFFER FOR SALE"). BY GENERAL ATLANTIC SINGAPORE FUND PVT. LTD. (THE "PROMOTER SELLING SHAREHOLDER") THE OFFER SHALL CONSTITUTE 24.46% OF THE POST-OFFER PAID UP EQUITY SHARE CAPITAL OF OUR COMPANY,

 

1. Our erstwhile promoters are subject to ongoing investigations by enforcement agencies, including Enforcement Directorate, Ministry of Finance, Government of India ("ED") and the outcome of such investigations may adversely impact our Company and the market price of our Equity Shares. Our Company received a freezing order from the ED, pursuant to which, the CP Group was, instructed not to alienate/ sell/ transfer/ create any lien/ liability in respect of the KFin Subject Shares (aggregating to 14.12% of our Equity Share capital). The KFin Subject Shares are also subjected to a provisional attachment order issued by the ED for a period of 180 days starting from March 8, 2022; or until an order is passed by the adjudicating authority of PMLA permitting the transfer, disposal, parting with or otherwise dealing with the KFin Subject Shares. The outcome of such investigation involving our erstwhile promoters, including Mr. C. Parthasarathy may adversely impact our Company and the market price of our Equity Shares. Additionally, there are certain outstanding legal proceedings involving our Company, Subsidiaries, Group Companies and certain of our Directors with ED, CBI etc. Outcome of such legal proceedings may affect our business, prospects, financial condition and results of operations. The amounts claimed in these proceedings have been disclosed to the extent ascertainable and include amounts claimed jointly and severally.

2. The KFin Subject Shares, constituting 14.12% of the total equity shareholding of our Company, held by certain members of the CP Group are subject to encumbrances in the nature of non-disposal undertakings and blocked positions. We cannot assure you that the lenders of the CP Group will not enforce these encumbrances. In the event that any or all of these encumbrances on the KFin Subject Shares are enforced by the lenders, the same may have an adverse impact on the market price of our Equity Shares.

3. The weighted average cost of acquisition for all Equity Shares acquired in one year, 18 months and three years preceding the date of the Prospectus is as set out below:

6. Average cost of acquisition of Equity Shares for the Promoter Selling Shareholder is Rs 74.06 per share Equity Share and Offer Price is Rs 366 per Equity Share.

7. Significant disruptions in our information technology systems or breaches of data security such as viruses, ransomware, spam attacks, phishing, and trojans, hacking, data theft and advance persistent threat, could adversely affect our business and reputation.

8. Concentration Risk: Our Company earns an average revenue of 60.79% from our mutual fund clients based on AAUM. A decline in the growth, value and composition of AAUM of the mutual funds managed by our clients may adversely impact the average revenue and profits earned by us from mutual funds.

9. Our past growth rates may not be indicative of our future growth, and if we are unable to adapt to evolving market trends, manage our growth or execute our strategies effectively, our business, financial condition and results of operations may be adversely affected.

10. One of our Group Companies, KSBL, is involved in several ongoing proceedings with SEBI in the nature of enquiry, prosecution and proceedings under Section 11B of the SEBI Act. Further, SEBI has passed orders pursuant to proceedings initiated against KSBL.

11. Client Concentration: In Fiscals 2020, 2021 and 2022 and six months ended September 30, 2021 and September 30, 2022, we derived 53.30%, 53.69%, 53.05%, 54.99% and 50.82%, respectively, of our revenue from operations from our top five customers and the loss of one or more such clients could adversely affect our business and prospects.

12. We are subject to periodic inspections by SEBI and PFRDA, pursuant to our registration as an RTA and CRA, respectively. As a result of such inspections from SEBI, we have been issued certain administrative warnings, deficiency letters and observations in the past and certain adjudication proceedings have been initiated against us. Non-compliance with observations made by SEBI and PFRDA during these inspections could expose us to penalties and restrictions.

13. Our Promoters may not have adequate experience in the business activities undertaken by our Company. We cannot assure you that this lack of adequate experience will not have any adverse impact on the management and operations of our Company.

14. Our profit / loss for the year/ revenue from operations (in %) (PAT margin) increased from (13.41)% in Fiscal 2021 to 23,23% in Fiscal 2022, primarily on account of certain nonrecurring events and it is not indicative of growth of profits in the future.

15. The offer comprises only an Offer for Sale by the Promoter Selling Shareholder and our Company will not receive any proceeds from the Offer for Sale.

16. The 5 BRLMs associated with the Offer have handled 82 public issues in the past three Fiscal Years, out of which 28 issues closed below the offer price on the listing date.

* Issues handled where there were no common BRLMs,

4. Weighted average cost of acquisition, ("WACA") compared to floor price and Offer price

5. The details of Price Earnings Ratio, Earnings Per Share, Return on Net worth and Net Asset Value Per share for Fiscal 2022/ As at March 31, 2022 is as follows:

* The ratio has been calculated using the Offer Price.

For further details and definitions, please refer the Prospectus.

# Note: Our Company received a letter dated December 9, 2022, from the Office of Additional Director, Directorate of Enforcement, Hyderabad Zonal Office on December 13, 2022 ("Authority", and such letter "ED Letter") Pursuant to the ED Letter the Authority has communicated that the attachment made pursuant to the provisional attachment order dated March 8, 2022, issued by the ED has been confirmed by the Adjudicating Authority (PMLA), New Delhi vide its order dated December 1, 2022.

This was an Offer in terms of Rule 19(2)(b) of the Securities Contracts (Regulation) Rules, 1957, as amended ("SCRR"), read with Regulation 31 of the SEBI ICDR Regulations. The Offer was made through the Books Building Process in terms of Regulation 6(2) of the SEBI ICDR Regulations, wherein not less than 75% of the Offer was available for allocation on a proportionate basis to Qualified Institutional Buyers ("QIBs") (the "QIB Portion"), provided that our Company and the Promoter Selling Shareholder in consultation with the Book Running Lead Managers, allocated 60% of the QIB Portion to Anchor Investors on a discretion are basis, out of which one-third was reserved for domestic Mutual Funds only, subject to valid Bids having been received from domestic Mutual Funds at or above the Anchor Investor Allocation Price, in accordance with the SEBI ICDR Regulations. Further. 5% of the Not QIB Portion was made available for allocation on a proportionate basis to Mutual Funds only, and the remainder of the Net QIB Portion was made available for allocation on a proportionate basis to all QIB Bidders (other than Anchor Investors), including Mutual Funds, subject to valid Bids having been received at or above the Offer Price. Further, 15% of the Offer was made a variable for allocation to Non-Institutional Bidders out of which (a) one third of such portion was reserved for Non-institutional Bidders with Bid size exceeding Rs 200,000 and up to Rs 1,000,000: and (b) two third of such portion was reserved for Non-Institutional Bidders with Bid size of more than Rs 1,000,000, provided that the unsubscribed portion in either of such sub-categories was allocated to Non-Institutional Bidders in the other sub-category of Non- Institutional Bidders and not more than 10% of the Offer was made available for allocation to Retail Individual Bidders ("RIBs") in accordance with the SEBl ICDR Regulations, subject to valid Bids having been received from them at or above the Offer Price. All potential Bidders (except Anchor investors) were mandatorily required to participate in the Offer through the Application Supported by Blocked Amount ("ASBA") process by providing details of their respective ASBA accounts and UPl ID in case of UPI Bidders, as applicable, pursuant to which their corresponding Bid Amount was blocked by the Self Certified Syndicate Banks ("SCSBs") or by the Sponsor Banks under The UPI Mechanism. as the case may be. to the extent of the respective Bid Amounts. Anchor Investors were not permitted to participate In the Offer through the ASBA Process For further details, see "Offer Procedure" beginning on page 464 of the Prospectus.

The bidding for Anchor Investor Opened and Closed oh Friday, December 16, 2022. Our Company received 44 applications from 35 anchor investors for 19,211,600 equity shares . The Anchor investor price was finalized at Rs 366 per Equity Share. A totaI of 18,442,623 Equity Shares were aIIocated under the Anchor investor Portion a aggregating to Rs 6,750,0 000. 018.00.

The Offer received 106,156 applications for 80,727,360 Equity Shares (prior to technical rejections) resulting in 1.97 times subscription. The details of the applications received in the Offer from various categories are as under (before technical rejections)

Final Demand

A summary of the final demand as per BSE and NSE as on the Bid/Offer Closing Date at different Bid prices is as under:

The Basis of Allotment was finalized in consultation on with the Designated Stock exchange, being NSE on December 26, 2022.

A. Allotment to Retail Individual Bidders (After Technical Rejections) (including ASBA Applications)

The Basis of Allotment to the Retail Individual Bidders, who have bid at cut-off or at the Offer Price of Rs 366 per Equity, was finalized in consultation with NSE This category has been subscribed to the extent of 1.19 times (including spillover from Non-Institutional Bidders category) The total number of Equity Shares Allotted In Retail Individual Bidders category is 4,732,738 Equity Shares (including spillover of 634,378 Equity Shares from Non-Institutional Bidders category) to 99,960 successful applicants. The category-wise details of the Basis of Allotment are as under:

Please Note 1 additional Equity Share has been allocated to Category 80 in the ratio of 227:303, Category 120 in the ratio of 158:317. Category 160 in the ratio of 30:121. Category 240 in the ratio of 32:43. Category 280 in the ratio of 49:99. Category 320 in the ratio of 39:159. Category 400 in the ratio of 75:101, Category 440in the ratio of 13:26and Category 480 in the ratio of 5:78.

B. Allotment to Non-Institutional Bidders (more than 12 lakhs and upto Rs 10 lakhs) (After Technical Rejections) (including ASBA Applications)

The Basis of Allotment to the Non-Institutional Bidders (more than 12 lakhs and upto 110 lakhs), who have bid at the Offer Price of Rs 366 per Equity Share or above, was finalized in consultation with NSE. This category has been subscribed to the extent of 0.20 times. The total number of Equity Shares allotted in this category is 409,840 Equity Shares to 557 successful applicants. The category-wise details of the Basis of Allotment are as under

Unsubscribed portion of 1,639,340 Equity Shares spilled over to QIB and Retail Categories in the ratio of 75:10.

C. Allotment to Non-Institutional Bidders (more than Rs 10 lakhs) (After Technical Rejections) (including ASBA Applications)

The Basis of Allotment to the Non-Institutional Bidders (more than Rs 10 lakhs), who have bid at the Offer Price of Rs 366 per Equity Share or above was finalized in consultation with NSE. This category has been subscribed to the extent of 0.08 times The total number of Equity Shares allotted in this category is 345,480 Equity Shares to 75 successful applicants The category-wise details of the Basis of Allotment are as under

Unsubscribed portion of 3,752,880 Equity Shares spilled over to QIB and Retail Categories in the ratio of 75:10.

D. Allotment to QIBs (Excluding Anchor Investors) (After Technical Rejections)

Allotment to QIBs. who have bid at the Offer Price of 1366 per Equity Share or above, has been done on a proportionate basis in consultation with NSE. This category has been subscribed to the extent of 3.21 times (including spillover from Non-Institutional Bidders category) of QIB portion. As per the SEBI Regulations. Mutual Funds were allotted 5% of the Equity Shares of QIB portion available i.e. 852,647 Equity Shares (including spillover of 237,892 Equity Shares from Non-Institutional Bidders category) and other QIBs and unsatisfied demand of Mutual Funds were allotted the remaining available Equity Shares i.e. 16,200,278 Equity Shares (including spillover of 4,519,950 Equity Shares from Non- Institutional Bidders category) on a proportionate basis. The total number of Equity Shares allotted in the QIB category is 17,052,925 Equity Shares, which were allotted to 45 successful Applicants. The category-wise details of the Basis of Allotment are as under.

E. Allotment to Anchor Investors

The Company and the Promoter Selling Shareholder, in consultation with the BRLMs. have allocated 18,442,623 Equity Shares to 35 Anchor Investors (through 44 Anchor Investor Application Forms) (including 8 domestic Mutual Funds through 17 schemes) at an Anchor Investor Offer Price at 1366 per Equity Share in accordance with SEBI ICDR Regulations. This represents 60% of the QIB portion.

The IPO Committee of our Company at its meeting held on December 27, 2022 has taken on record the basis of allotment of Equity Shares approved by the Designated Stock Exchange, being NSE and has allotted the Equity Shares to various successful applicants. The Allotment Advice Cum Refund Intimation and/or notices have been dispatched to the address of the investors as registered with the depositories Further, instructions to the SCSBs have been issued for unblocking of funds and transfer to the Public Offer Account on December 26, 2022 and the payments to non-syndicate brokers have been issued on December 27, 2022. In case the same is not received within ten days, investors may contact the Registrar to the Offer at the address given below. The Equity Shares allotted to the successful allottees have been uploaded on December 27, 2022 for credit into the respective beneficiary accounts subject to validation of the account details with the depositories concerned The Company has filed the Listing application with NSE and BSE on December 27, 2022 The Company has received the listing and trading approval from NSE & BSE, and trading will commence on December 29, 2022

Note: All capitalized terms used and not defined herein shall have the respective meanings assigned to them in the Prospectus.

INVESTORS PLEASE NOTE

The details of the allotment made will be hosted on the website of the Registrar to the Offer, Bigshare Services Private Limited at: www.bigshareonline.com

All future correspondence in this regard may kindly be addressed to the Registrar to the Offer quoting full name of the First/ sole Bidder. Bid cum Application Form number. Bidder DP ID. Client ID. PAN. date of submission of Bid cum Application Form, address of the Bidder, number of Equity Shares applied for. the name and address of the Designated Intermediary where the Bid cum Application Form was submitted by the Bidder and a copy of the Acknowledgment Slip received from the Designated Intermediary at the address given below:

 

THE LEVEL OF SUBSCRIPTION SHOULD NOT BE TAKEN TO BE INDICATIVE OF EITHER THE MARKET PRICE OF THE EQUITY SHARES ON LISTING OR THE BUSINESS PROSPECTS OF KFIN TECHNOLOGIES LIMITED.

KFIN TECHNOLOGIES LIMITED has filed the prospectus dated December 22, 2022 with RoC and thereafter with SEBI. The Prospectus is available on the website of SEBI at www.sebi.gov.in . the websites of the Stock Exchanges, i.e., BSE and NSE at www.bseindia.com  and www.nseindia.com . respectively, and the websites of the BRLMs. i.e., ICICI Securities Limited. Kotak Mahindra Capital Company Limited. J.P Morgan India Private Limited. IIFL Securities Limited and Jefferies India Private Limited at www.icicisecurities.com . www.investmentbankkotak.com  www.jpmipl.com . www.iiflcap.com   and www.jefferies.com . respectively. Investors should note that an investment in equity shares involves a high degree of risk, and for details relating to such risks, please see the section entitled "Risk Factors^" on page 30 of the Prospectus. Potential investors should not rely on the DRHP filed with SEBI for making any investment decision.

The Equity Shares offered in the Offer have not been, and will not be. registered under the U S. Securities Act and may not be offered or sold within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U S Securities Act and accordingly, the Equity Shares are being offered and sold within the United States solely to persons who are reasonably believed to be "qualified institutional buyers" (as defined in Rule 144 A under the U S. Securities Act) in transactions exempt from the registration requirements of the U S. Securities Act. and (ii) outside the United States in "offshore transactions" as defined in and in reliance on Regulation S under the U S. Securities Act and the applicable laws of the jurisdiction where those offers and sales occur.