Indian marketing services pioneer RK Swamy set to go public with Rs 423 crore IPO next week

Indian equity markets have seen a slew of initial public offerings from diverse sectors in recent years. In 2023-24 as of January 31, there have been 85 public issues with a cumulative fund raise of Rs 72,991 crore. In the 2022-23 period, there were only 56 IPOs that raised Rs 63,275 crore. In fact, in terms of just the number of IPOs, this financial year will see the most issuances in more than a decade, data from Prime Database shows.

Come next week, RK Swamy, the largest Indian majority-owned integrated marketing company will go public. There have been several small and medium marketing and advertising firms that have gone public on the SME exchange platforms, but RK Swamy's IPO will be among the first such on the mainboard.

The Rs 423 crore issue will open for subscription on March 4 and close on March 6. The price band is set at Rs 270-288 a share. The issue includes fresh shares, where the company is looking to raise Rs 173 crore. There is also an offer for sale (OFS) of up to 87 lakh shares from promoters and existing shareholders, aggregating to around Rs 250 crore at the upper end of the price band.

RK Swamy is a five-decades-old integrated marketing company offering services across creative, media, data analytics and market research services. The company has, over the years, catered to over 4,000 clients, including the likes of State Bank of India, Life Insurance Corporation, Air India, NTPC, ONGC among many others. In the financial year 2022-23, RK Swamy served 475 clients, up from 455 in 2021-22 and 410 in the financial year 2020-21. Its top 50 clients accounted for 71.69 per cent of revenue in the last financial year.

In 2022-23, RK Swamy's revenue rose 22.4 per cent from a year ago to Rs 299.9 crore. Its net profit for the year stood at Rs 31.3 crore, up 63 per cent.

The company intends to set up a digital video content production studio, fund investments in IT infrastructure development in RK Swamy and its subsidiaries as well as fund setting up new customer experience centres from the IPO proceeds.

"Customer data analytics and markets space calls for us to invest more and create original data platforms. India currently doesn't have a third-party consumer data bank. A lot of the IPO proceeds is going towards enhancing marketing infrastructure," said Srinivasan Swamy, chairman and MD of RK Swamy.

The company has plans to launch a marketing platform aimed at helping the automobile retail sector, he added.

It also plans to expand its geographic footprint and aims to go international too.

"We have started in Dubai and Bangladesh. Those are small steps. We will go to those markets. We are already serving international clients. In our data analytics space, we are doing services for clients in the Philippines. So, we will definitely evolve, the market is going in those directions," said Shekar Swamy, the CEO of RK Swamy.

RK Swamy was set up in 1973 as RK Swamy Advertising Associates. In 1985, RK Swamy and BBDO, a global player part of the Omnicom Group, stitched a partnership. The two companies parted ways after 37 years in 2022. The split was initiated in the wake of RK Swamy deciding to integrate its arms Hansa Research and Hansa Customer Equity, and it was done amicably said Shekar.

"They (BBDO) were only in RK Swamy. They were not in Hansa Research and Hansa Customer Equity. We needed to be an integrated operation. They were wonderful people, we had 37 year partnership and there was no problem," he said.

Srivinasan is hopeful that this IPO could pave the way for more such Indian ad and marketing agencies going public.

"I think it will open the eyes of other large Indian agencies; they certainly could look at this as an opportunity to arm themselves with better capital so that they can take on the multinationals with deep pockets," he said.