Mutual fund company HDFC Asset Management Co Ltd is seeking a valuation of as much as Rs 23,161 crore ($3.4 billion) through an initial public offering (IPO) next week.
HDFC AMC has set a price band of Rs 1,095-1,100 apiece for the public float, majority owner Housing Development Finance Corp said in a stock-exchange filing on Tuesday.
The mutual fund company, a joint venture between mortgage lender HDFC and the UK’s Standard Life Investments Ltd, is aiming to raise up to Rs 2,800 crore ($409 million) at the upper end of the price band.
The anchor investors’ book for the IPO will open on 24 July. Public subscriptions will begin a day later and close on 27 July.
The IPO is the second ever by a mutual fund company after Reliance Nippon Life Asset Management Co went public last year. The Rs 1,542-crore share sale of India’s third-largest mutual fund company was subscribed 81 times.
Reliance Nippon Life AMC had a market capitalisation of Rs 13,565 crore at the end of trading on Tuesday.
HDFC AMC had filed its draft prospectus for the IPO on 15 March. It received regulatory nod on 22 June. However, its proposal to go public had hit a snag as the Securities and Exchange Board of India was examining ‘past violations’, VCCircle reported last month.
HDFC AMC’s offering comprises a sale of 25.45 million shares by HDFC and Standard Life. The mortgage lender will sell 8.59 million shares, or a 4.08% stake, while Standard Life will sell 16.86 million shares through the IPO.
The mortgage lender’s stake in HDFC AMC will drop to 53.28% after the IPO from 57.36%. Standard Life’s stake will fall to 30.23% from 38.24%. The company will get three years to meet SEBI’s 25% minimum public shareholding norms.
The mortgage lender had kicked off the IPO process in November last year when it said it would pare a stake in the mutual fund unit via an IPO.
HDFC AMC has appointed a dozen bankers to manage the share sale. These are Kotak Mahindra Capital Co, Axis Capital, Bank of America Merrill Lynch, Citigroup Global Markets (India), CLSA India, HDFC Bank, ICICI Securities, IIFL Holdings, JM Financial, JP Morgan India, Morgan Stanley India and Nomura Financial Advisory and Securities India.
The company had Rs 3.06 lakh crore worth of assets under management at the end of June, a tad less than ICICI Prudential Asset Management Co. Ltd’s Rs 3.10 lakh crore, according to the Association of Mutual Funds of India.
HDFC AMC’s plan to go public follows a growing trend where banks and financial services are looking to unlock value in group businesses after the rapid rise in stock markets.
The firm will become the fourth firm under the Deepak Parekh-led HDFC group to go public.
Mortgage lender HDFC got listed in 1978, a year after it began operations, according to its website. HDFC Bank went public in March 1995 with a Rs 50 crore IPO that was subscribed 55 times. Its shares listed at Rs 40 apiece, four times the issue price.
HDFC Standard Life Insurance Co. floated its IPO in November 2017. The Rs 8,695-crore IPO was subscribed a little more than five times and the insurer gained on its trading debut.