Akiko Global Services
- Akiko Global Services is coming out with an initial public offering (IPO) of 30,01,600 equity shares of face value of Rs 10 each in a price band Rs 73-77 per equity share.
- The issue will open on June 25, 2024 and will close on June 27, 2024.
- The shares will be listed on SME platform of NSE.
- The share is priced 7.30 times of its face value on the lower side and 7.70 times on the higher side.
- Book running lead manager to the issue is Fast Track Finsec.
- Compliance Officer for the issue is Pooja Roy.
Profile of the company
Akiko Global Services has commenced its operations in 2018 and is currently working as a Channel Partner (DSA) for major Banks / NBFCs. Its business model involves tele-calling, corporate activities, as well as a feet-on-street and digital marketing model to acquire customers digitally. It is a channel partner for major banks and Non-Banking Financial Companies (NBFCs) in India, with six years of expertise and experience, working majorly in the distribution and sales of financial products such as credit cards and loans.
It is using a Customer Relationship Management (CRM) system in its day-to-day operations. All leads undergo injection and monitoring within its CRM, developed by the Company. Its CRM is developed with the features to protect customer information from any threat.
As the company continues to grow, it is committed to continually evaluating and improving its key activities to enhance customer satisfaction and optimize its business processes. By combining the expertise of its team members, the power of digital marketing, the effectiveness of its telemarketing approach, and its strong network of Feet-on-street, it strives to provide an exceptional and seamless experience for its customers.
Proceed is being used for:
- Implementation of ERP Solution and TeleCRM
- Mobile application for financial product solution
- Meeting working capital requirements
- Enhancing visibility and awareness of its brands, including but not limited to “Akiko Global” or “Moneyfair”
- General corporate purpose
- Issue expenses
Industry Overview
The financial services market reached a value of nearly $23,328.73 billion in 2021, having grown at a compound annual growth rate (CAGR) of 3.5% since 2016. The market is expected to grow from $23,328.73 billion in 2021 to $33,313.50 billion in 2026 at a rate of 7.4%. The market is then expected to grow at a CAGR of 6.3% from 2026 and reach $45,149.00 billion in 2031. The financial services market is segmented by type into lending and payments, insurance, reinsurance and insurance brokerage, investments and foreign exchange services. The lending and payments market was the largest segment of the financial services market segmented by type, accounting for 33.6% of the total in 2021. Going forward, the investments segment is expected to be the fastest growing segment in the financial services market segmented by type, at a CAGR of 9.3% during 2021-2026.
Meanwhile, the credit card industry has grown tremendously in India. There are many developments happening in the space, with varied innovations and changes in technology. These new developments offer smooth on-boarding journeys, differentiated card products, personalised offers and rewards, and better mobile apps, which have proved to be greatly beneficial to existing customers and attracted new customers as well. Credit card issuers are also making efforts to bring further innovation and awareness to this space. The same can be seen from the significant growth in India’s credit card market. The credit card industry in India has witnessed a compound annual growth rate (CAGR) of 20%1 in the last five years. The number of credit cards crossed 78 million in July 2022. Moreover, in May 2022, the overall credit card spend reached its highest-ever number of Rs 1.13 lakh crore.
The Indian credit card market is at the right juncture to expand the industry to the next level. The guidelines by the RBI are also facilitating this expected exponential growth in the coming years. This growth will be led by different market players, who will all need to set individual rules to expand their credit card businesses. With the RBI promoting as well as structuring the space, a levelled playing field can be created, which will challenge the players to be more innovative in their product and service offerings. Overall, a credit card is a great product that attracts millennials and Gen-Z alike, and cross sells other products and services. In future, it may also see an increase in the number of collaborations to improve the service offerings in this space. Additionally, with the evolving models and changes in the credit card industry, an interesting time lies ahead for the credit industry.
Pros and strengths
Diversified Business Model: The company’s business model encompasses various customer acquisition strategies, including telemarketing, feet-on-street approach, digital marketing, and corporate activities. This diversified approach allows it to reach a wide customer base and optimize its sales potential.
Extensive Database: Over the years, the company has amassed a vast database of customers from its target segments. This aids it in precisely targeting potential customers and tailor its offerings to their specific needs, enhancing the efficiency of its marketing efforts.
Specializes in selling credit cards and personal loans: The company specializes in selling credit cards and personal loans on behalf of banks and financial institution in India. It predominantly focuses on sustainable growth and expanding its customer base, in line with its successful business model which includes telemarketing, feet-on-street, digital marketing, and corporate activities. The company’s comprehensive business strategy, backed by its experienced team and extensive database of target segment customers, will enable it to achieve its goals.
Risks and concerns
Maximum revenue comes top 10 customers: The company’s top ten customers contribute approximately 93.26% of its revenues for the financial year ended March 31, 2023. Any decline in its market share, growing competition and any change in the demand for its services by these customers may adversely affect its ability to retain them. It cannot assure that it shall generate the same quantum of business, or any business at all, from these customers, and loss of business from one or more of them may adversely affect its revenues and profitability. However, the composition and revenue generated from these clients might change as it continues to add new clients in normal course of business. It intends to retain its customers by offering solutions to address specific needs in a proactive, cost effective and time efficient manner. This helps it in providing better value to each customer thereby increasing its engagement with its new and existing customer base that presents a substantial opportunity for growth.
Geographical concentration of its customer base may restrict operations: The company presently has a concentration of customer base and revenue in the state of Maharashtra. The revenue earned in the state in January 2024, March 2023, March 2022, and March 2021 is Rs 2030.11 Lakh (78.38%) Rs 2243.23 Lakh (56.67%), Rs 1015.15 Lakh (75.09%) and Rs 588.77 Lakh (96.40%) respectively. It is aware that if a company's customer base is heavily concentrated in a specific region, it becomes more vulnerable to economic changes, local market conditions, or geopolitical events that may affect that particular area. Further, economic downturns could disproportionately impact the purchasing power of customers in that region. Its concentration of customer base in the state of Maharashtra makes its operations susceptible to local and regional factors, such as accidents, system failures, economic, and weather conditions, natural disasters, demographic and population changes, and other unforeseen events and circumstances that may disrupt or restrict the exchange of information within the state that may adversely affect the workflow and the results of operations of the Company in the future.
Competition in its business from domestic competitors: The financial sector in India witnesses’ intense competition, with numerous players vying for market share. Rival firms may offer similar products and services, affecting its pricing power and market penetration. Staying ahead of its competitors through innovation and superior customer service is critical. Competition may result in pricing pressures, reduced profit margins or lost market share or a failure to grow its market share, any of which could substantially harm its business and results of operations. There can be no assurance that it can effectively compete with its competitors in the future, and any such failure to compete effectively may have a material adverse effect on its business, financial condition and results of operations.
Outlook
Akiko Global Services partners with major banks and NBFCs in India. The company has six years of experience and specializes in distributing and selling financial products, such as credit cards and loans. The company specializes in helping banks and financial institutions in India sell credit cards and personal loans. The Money Fair, powered by Akiko Global Services Limited, is a technology platform that uses algorithms to gather and analyze data to assess creditworthiness. It provides insights for easy comparison of offers and aims to increase the chances of securing a loan or a card for customers. On the concern side, the company’s top ten customers contribute approximately 93.26% of its revenues for the financial year ended March 31, 2023. Any loss of business from one or more of them may adversely affect its revenues and profitability. The geographical concentration of its customer base may restrict its operations and adversely affect its business, results of operations, and financial conditions in the future.
The issue has been offered in a price band of Rs 73-77 per equity share. The aggregate size of the offer is Rs 21.91 crore to Rs 23.11 crore based on lower and upper price band respectively. On performance front, total income for the financial year 2022-23 stood at Rs 3,958.97 lakh whereas in Financial Year 2021-22 the same stood at Rs 1,353.31 lakh representing an increase of 192.54%. The main reason of increase was increase in the volume of sale of services by the Company. Moreover, the company’s profit after tax for the year increase by 482.22% from net profit of Rs 77.85 lakh in financial year 2021-22 to net profit Rs 453.26 lakh in financial year 2022-23. Consequently, its PAT Margin expanded to 11.45% in financial year 2022-23 from 5.76% in financial year 2021-22. The company employs a multi-channel approach that maximizes reach and engagement for acquiring customers effectively. Its telemarketing team receives regular training to ensure effective communication and conversion rates. In digital marketing, it leverages emerging trends, invest in search engine optimization (SEO), pay-per-click (PPC) advertising, social media marketing, whatsapp and email campaigns to reach a wider audience and increase brand visibility. Moreover, to bolster its business, the company strives to deepen its relationships with banks. This collaboration will provide a competitive edge and open doors to exclusive products and features for its customers by showcasing its expertise, exceptional customer support, and innovative approach to marketing, it aims to become a preferred partner for banks in their credit card and personal loan offerings.
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