Canara Robeco AMC will grow at 40% annually for the next 5 years and the mutual fund house is not averse to growing bigger through an acquisition, said Kiyoshi Habiro, chief executive of Orix Corporation, the promoter of Robeco. The AMC on Thursday listed with 5% premium on the NSE at Rs 280, compared to the IPO issue price of Rs 266.
Habiro said mutual fund regulations in India are very sensible and the country is one of the world’s best growth markets for mutual funds. “Hong Kong and China are seeing also seeing big growth in mutual funds,” he said in an interaction with FE.
The AMC’s share price jumped 12% intraday, up 18% from the IPO price. Orix acquired the Netherlands-based AMC, Robeco Groep NV, in 2013. The money raised through IPO will be used for expansion of operations, Habiro said.
Rajnish Narula, MD and chief executive of Canara Robeco, said it will aim for the fastest growth among peers. The shift to greater equity-allocation focus from debt during the credit crisis helped the firm, he said. Investment bankers said the AMC’s stock price is set to rise.
“We are extremely confident about the future that lies ahead for the firm, based on our interactions with various investors,” said Sonia Dasgupta, MD & CEO of investment banking at JM Financial. “This is one of the premium franchises from the house of Canara Bank.”
Canara Bank is one of the strongest public sector banks, and this gives the AMC a great parentage, Dasgupta said.
The mutual fund industry tailwinds, huge under penetration, financialisation of savings having just started and the median age of population are positives and indicate continued stock price rise for the AMC, she said.
The firm, a joint venture between Canara Bank and Orix, offer fund management and advisory services across equity, debt and hybrid schemes.
“On fundamentals side, the AMC has delivered a strong growth as its AUM nearly doubled from FY23 along with a healthy profit margin in this period, majorly due to continued momentum in stock market and strong inflow in mutual funds,” said a brokerage report.
The growth momentum, strong distribution network and equity tilt AUMs make it an interesting stock, brokers said. “Investors can invest in the company with a long-term holding view,” said Master Capital Services.