HDFC AMC soars in blockbuster trading debut

By Tanvi Mehta and Devidutta Tripathy

BENGALURU/NEW DELHI (Reuters) - HDFC Asset Management Co Ltd's shares soared 67 percent on the first day of trading on Monday after a $408 million initial public offering last month, reflecting bullish investor sentiment on Indian mutual fund managers who have seen record inflows in recent months.

HDFC AMC, the second-biggest mutual fund manager by assets under management, and its peers in the $344 billion sector have benefited from Indians moving away from traditional investment avenues such as real estate and gold to financial savings.

A shock scrapping of high-value banknotes in November 2016 has also helped boost inflows for mutual fund managers whose assets under management doubled in the three years to March 2018.

HDFC AMC, which is the most profitable in the 43-player sector, also stands out because of its higher proportion of equity assets.

"It's been a fairy tale right from the word go," said Jagannadham Thunuguntla, senior vice president and head of research (wealth) at Centrum Broking, of the HDFC AMC IPO.

"It is a top-of-the-league AMC with a strong brand name and parentage. It is a clear proxy to Indian financialisation," he said, adding that the stock's strong trading debut should help the IPO market going forward.

By 0549 GMT, HDFC AMC shares were trading at 1,808 rupees, 64 percent higher than the IPO issue price of 1100 rupees, after having risen to a peak of 1,835 rupees.

The IPO, which closed on July 27, was subscribed 83 times, indicating a strong market debut.

The AMC's parent, Housing Development Finance Corp, and group company HDFC Bank are among investor favourites. Another group company, HDFC Standard Life Insurance, listed last November and is up nearly 68 percent from its IPO price.

Including the HDFC AMC IPO, Indian companies have raised $4.8 billion from primary markets so far this year, following a record $11 billion initial share sales in 2017.

HDFC AMC's two biggest shareholders - mortgage lender Housing Development Finance Corp Ltd and Standard Life Aberdeen Plc - sold a combined 12 percent stake in the IPO.

Last year, HDFC AMC's smaller rival Reliance Nippon Life Asset Management Ltd raised 15.42 billion rupees in an IPO that also saw strong interest from investors.

($1 = 68.6075 Indian rupees)

(Reporting by Tanvi Mehta and Devidutta Tripathy; Additional reporting by Gaurav Dogra in Bengaluru; Editing by Subhranshu Sahu)