Motilal Oswal Financial Services Ltd. an Ipo in India (summary)

Motilal Oswal Financial Services Ltd. An IPO in India (Summary)

The case talks about the founder Raamdev Agarwal and Motilal Oswal IPO in India. Motilal Oswal was established in 1987 and it soon became the third largest broker in India. The company’s profit grew at an annual rate of 45% between 2000 to 2006 due to stock market boom. And they felt the need to go public as they needed exit strategy for the private investors and also they needs funds for expansion. Listing would also bring in other benefits to the company like it would gain recognition and respect world over this would also increase its balance sheet size and credibility.

The economic environment at that time was just betting better post libralisation in 1991 but india till faced problems of budget deficit of over 4% of GDP. Even though India’s GDP was growing at 8% per annum.

Raamdev Agarwal a CA started a Motilal Oswal a brokerage firm which provided research services. Initially starting with BSE and later became member of NSE. Motilal had a huge client base and they were the pioneer in broking franchisee. Motilal Oswal brought in strategic partner for their growth. It also acquired 3 small broking firms. For growth they needed fund and had thought of private equity and IPO as well. Going public was important to gain visibility among the FIIs and the mutual funds that brought in huge business.

For going public timing was very crucial as they had to follow the regulations also markets need to be high to get good value for the shareholders. They have to also take into consideration the interest of the original shareholders and the minority shareholders also.

Rakesh Shah