HDFC MF board gives nod for IPO

HDFC Asset Management Company (commonly referred to as HDFC MF) could soon become the second asset manager to go public. The country’s second-largest mutual fund on Thursday got its board’s approval to initiate the process to go public. HDFC MF is backed by the country’s largest mortgage lender Housing Development Finance Corporation, and global investment firm Standard Life. 

The board has “approved initiating the process for an initial public offering (IPO), subject to relevant corporate, regulatory, and other approvals as applicable/required,” the fund house said in a statement. 

The fund house said major shareholders HDFC and Standard Life, too, have given the in-principle nod for the IPO. It is likely that both stakeholders will pare their holdings in the IPO. It said HDFC and Standard Life intend to maintain their shareholding in the fund house above 50 per cent and 25 per cent.

“We believe that the listing would unlock value of the business for the shareholders and provide investors opportunity to participate in the emerging asset management space within our group,” said HDFC Chairman Deepak Parekh, who also chairs the board of the fund house.

Earlier this month, HDFC Standard Life Insurance Company, a joint venture between HDFC and Standard Life, came out with an Rs 8,700-crore IPO. 

In the offering, HDFC and the UK’s Standard Life sold shares worth Rs 5,540 crore and Rs 3,160 crore, respectively. Shares of HDFC Life are currently up 28 per cent over its issue price.

Reliance Nippon Life Asset Management (popularly called Reliance MF) got listed earlier this month. The Reliance Capital-backed firm, which manages MF assets worth Rs 2.32 lakh crore (average for the September quarter), is currently valued at Rs 16,074 crore. 

The mutual fund industry is going through a buoyant phase with assets climbing to Rs 21 lakh crore and strong inflows coming into equity schemes each month.

“The Indian asset management industry has seen strong business flows with increasing awareness of mutual fund products. The improving penetration levels of products provide an interesting opportunity to channelise investments more productively,” said Milind Barve, managing director, HDFC AMC.

HDFC MF will soon appoint investment bankers to handle the IPO. The fund house could file the offer document with Sebi next month or early next year. Industry players expect the IPO to hit the market in the first quarter of 2018.