SBI MF's Rs 7,000-cr IPO likely in Q1FY23; eyes valuations of Rs 70,000 cr

JV partners SBI, Amundi to divest 6% and 4%, respectively

SBI Funds Management’s (SBI Mutual Fund) initial public offering (IPO) is likely to hit the market in the first quarter of next financial year, said people close to the development.

The asset manager’s IPO size could be between Rs 7,000-Rs 7,500 crore, valuing the country’s largest MF between Rs 70,000-Rs 75,000 crore, they said.

Senior officials in the fund house and SBI said that the IPO process has already been kick-started and investment bankers will be finalised soon. The draft red herring prospectus (DRHP) will be filed with market regulatory Sebi by end of January 2022, they said.

SBI MF is a 63:37 joint venture between State Bank of India (SBI), India’s largest lender in terms of balance sheet size and Europe’s leading asset manager Amundi.

Both partners made the IPO plans official on Wednesday.

SBI in a stock exchange disclosure said, “the executive committee of central board of the bank has accorded approval for exploring possibilities to offload 6 per cent stake of the bank in SBI Funds Management through IPO route, subject to receipt of all regulatory approvals.”

In a separate filing French asset manager said “Amundi announces its support to this initiative and its intention to sell approx. 4 per cent of SBI Funds Management as part of the envisaged IPO. The IPO would be achieved on the Indian stock market in 2022, subject to regulatory approvals and market conditions.”

A senior SBI official said they are eyeing a market share of more than 20 per cent—similar to what the bank has in the deposit and loan base. He said the IPO will help provide liquidity to SBI, Amundi and ESOP holders.

The IPO proceeds and future divestment in SBI MF will help shore up the bank’s capital base, he said.

SBI MF will be SBI’s third subsidiary to list after SBI Life Insurance (market cap of Rs 1.18 trillion) and SBI SBI Cards and Payment Services (Rs 84,570 crore). SBI is also looking to take SBI General Insurance public.

SBI MF will be the sixth pure-play mutual fund house to list on domestic bourses. HDFC MF, MF, Aditya Birla Sun Life MF, UTI MF and Nippon Life India MF are five listed firms in the space.

SBI MF’s had assets under management (AUM) of Rs 5.78 trillion during the September 2021 quarter and a market share of 16 per cent.

HDFC MF is the biggest of the lot with AUM of Rs 4.39 trillion as on September 2021 and market cap of Rs 52,421 crore.

The AUM of the domestic MF industry is around Rs 38.5 trillion. The industry is pegged to reach the Rs 100-trillion AUM mark by 2030 as MFs look to increase their penetration, taking advantage of domestic household’s growing preference to invest in financial assets

India’s MF AUM as percentage of GDP is only 12 per cent versus the global world average of 63 per cent, entailing huge headroom for growth.