Roadzen, Inc.'s (NASDAQ:RDZN) largest shareholders are private companies who were rewarded as market cap surged US$36m last week

Key Insights

• The considerable ownership by private companies in Roadzen indicates that they collectively have a greater say in management and business strategy
• 53% of the business is held by the top 4 shareholders
• Insiders have been buying lately

If you want to know who really controls Roadzen, Inc. (NASDAQ:RDZN), then you'll have to look at the makeup of its share registry. We can see that private companies own the lion's share in the company with 32% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, private companies collectively scored the highest last week as the company hit US$110m market cap following a 50% gain in the stock.

Let's take a closer look to see what the different types of shareholders can tell us about Roadzen.

Check out our latest analysis for Roadzen

What Does The Institutional Ownership Tell Us About Roadzen?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

Roadzen already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Roadzen's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Roadzen. The company's largest shareholder is Avacara Pte, Ltd., with ownership of 25%. With 11% and 9.5% of the shares outstanding respectively, EVP Management LP and WI Harper Group are the second and third largest shareholders. In addition, we found that Rohan Malhotra, the CEO has 1.2% of the shares allocated to their name.

On looking further, we found that 53% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Roadzen

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

We can see that insiders own shares in Roadzen, Inc.. In their own names, insiders own US$2.1m worth of stock in the US$110m company. It is good to see some investment by insiders, but we usually like to see higher insider holdings. It might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 29% stake in Roadzen. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Equity Ownership

Private equity firms hold a 28% stake in Roadzen. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Private Company Ownership

It seems that Private Companies own 32%, of the Roadzen stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Roadzen better, we need to consider many other factors. For instance, we've identified 4 warning signs for Roadzen (2 can't be ignored) that you should be aware of.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.