Aditya Birla MF files IPO document with Sebi; issue size Rs 2,000 cr

Through the maiden offering Canadian firm Sun Life Financial will divest its 12.56% holding, while Aditya Birla Capital will sell a little less than 1%

Aditya Birla Sun Life AMC on Monday filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) for an initial public offering (IPO).

The IPO size could be around Rs 2,000 crore, said sources. This will value the asset manager at nearly Rs 15,000 crore.

Through the maiden offering Canadian firm Sun Life Financial will divest its 12.56 per cent holding, while Indian partner Aditya Birla Capital (ABCL) will sell a little less than a per cent.

Currently, ABCL holds 51 per cent stake and Sun Life has 49 per cent stake in the AMC. Following the IPO, the total promoter stake in the fund house will fall from 100 per cent at present to 86.5 per cent.

Shares of parent ABCL rose 1.6 per cent on Tuesday.

Aditya Birla Sun Life AMC is currently India’s fourth-largest –largest non-bank affiliated-- fund house with assets under management (AUM) of Rs 2.74 trillion as on December 2020. The asset manager has retained its fourth position since September 2011 in terms of quarterly average AUM, per the DRHP. At the end of March 2020, the fund house ranked sixth in terms of total folios at 7.2 million.

The fund house has seen an improvement in the higher share of individual investors from 40 per cent in March 2016 to 46.5 per cent in December 2020-- second highest increase among the top five AMCs

The company’s assets have grown at an annualised rate of 23.6 per cent during the four years to March 2020. This is the fifth highest growth rate among the top 10 players.

For the nine months ended December 2020, Aditya Birla Sun Life AMC had reported total income of Rs 874 crore and net profit of Rs 370 crore

Aditya Birla Sun Life AMC has managed to increase the share of equity in its overall AUM. The fund house offers 135 schemes of which 35 are in the equity segment, 95 in the debt segment, and five exchange traded funds (ETFs).

In the DRHP, one of the risk factors mentioned by the fund house concentration of AUM in a few schemes.

At the end of December 2020, the fund house’s top five equity-oriented schemes accounted for around 62.4 per cent of total equity-oriented AUM and top five debt-oriented schemes constituted nearly 60 per cent of its debt-oriented AUM.

“Underperformance by any of these funds may cause increased redemptions and have a disproportionate adverse impact on our liquidity, AUM and income,” the asset manager has said in its DRHP.

The IPO is being handled by 11 investment banks. Some of them include Kotak, BofA Securities, Citi and Axis Capital.

Currently, HDFC AMC, Nippon AMC and UTI AMC are the only asset managers in the listed space.