When is the SBI Mutual Fund IPO expected to hit the IPO market?
Answer
Answer
It has been almost made official that the SBI Mutual Fund could be the next big AMC to list on the Indian bourses. Currently, there are already 4 major AMCs (all part of the top 15 by AUM), listed on the stock exchanges. These include HDFC AMC, UTI AMC, Nippon Life AMC, and Aditya Birla AMC. However, SBI MF is a giant in the MF industry with an AUM of more than Rs.6.20 trillion. Even its valuations are likely to be robust on big equity concentration.
SBI plans to raise nearly $1 billion or Rs.7,600 crore via an offer for sale by selling 10% of holdings. Amundi will offer a 4% stake in SBI Mutual Fund while the State Bank of India will offer the other 6% in the OFS. Amundi is the JV partner of SBI in SBI Mutual Fund with Amundi holding 37% take in SBI Mutual Fund and State Bank of India holding the balance 63% stake. This will be one more unlocking of the sum of parts valuation for SBI.
The IPO of SBI Mutual Fund will only happen in the next fiscal year as SBI is yet to file the draft red herring prospectus with SEBI. After the filing is done, it takes 2 months for SEBI to approve the DRHP. It is therefore very likely that the SBI Mutual Fund IPO will happen either in the first quarter of FY23 or the second quarter of FY23. The $1 billion IPO will be the largest MF AMC IPO in India and it is likely to peg SBI MF valuations at $10-12 billion.
The issue will be lead managed by Bank of America Securities, Citigroup, HSBC Securities, Axis Capital, Kotak Mahindra Capital, SBI Capital, and BNP Paribas. Currently, SBI Funds manages around Rs.15 trillion across all formats including passives and PMS. For FY21, SBI MF's total revenues stood at Rs.1,568 crore and net profits of Rs.860 crore implying net margins of 54.85%. It has a high equity component of 56% in its overall AUM.