HDFC AMC to raise Rs 2,800 cr via IPO

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Mumbai | Updated: July 19, 2018 2:16:14 AM

HDFC Asset Management Company (AMC), the country’s second-largest fund house in terms of average assets under management (AAUM), is planning to raise around Rs 2,800 crore from its initial public offering (IPO) that opens on July 25.

The company has set a price band of Rs 1,095-1,100 per share for its IPO and when calculated at the upper band of the issue price the company will be valued at around Rs 23,300 crore.

HDFC Asset Management Company (AMC), the country’s second-largest fund house in terms of average assets under management (AAUM), is planning to raise around Rs 2,800 crore from its initial public offering (IPO) that opens on July 25.

The company has set a price band of Rs 1,095-1,100 per share for its IPO and when calculated at the upper band of the issue price the company will be valued at around Rs 23,300 crore.

Valuation matrix for the fund management business is market cap to AUM ratio which is 7.6% for the HDFC AMC. Reliance Nippon Life AMC, which got listed in November last year, had a market cap to AUM ratio of 4.5% at the time of listing. Typically deals in the mutual funds in India take place anywhere between 5% and 7% of the AUM if equity assets are higher or 2-4% of the AUM if debt assets are higher.

The AAUM of HDFC AMC for the April-June quarter stood at Rs 3.06 lakh crore, while ICICI Prudential AMC tops the chart with an AAUM of Rs 3.10 lakh crore, data from Association of Mutual Funds in India (Amfi) showed.

However, HDFC AMC is the most profitable fund house in the country. It posted a net profit of Rs 721.61 crore in the last financial year. Net worth of the company stood at Rs 2,159. 68 crore as of March 31, 2018.

Milind Barve, MD of HDFC AMC, said during a press conference, “Our story of three principals has guided our strategic thinking all unchanged for the last 18 years of existence. This three principal that has been ingrained with every thinking and strategy for us has been build of business of scale, to build business which is high quality and third is profitability.”

The IPO is an offer for sale (OFS), of 2.5 crore shares, promoters HDFC and Standard Life Investments is selling 85.92 lakh shares, and 1.68 crore shares respectively. Post the IPO, HDFC’s shareholding will come down to 52.92% from 56.97% and that of Standard Life Investments will come down to 30.03% from 37.98%. The IPO will open on July 25 and close on July 27. The anchor investors bidding date will be on July 24.

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