How Aditya Birla Sun Life MF stacks up against peers as IPO opens next week

Aditya Birla Sun Life Asset Management Co Ltd will open its initial public offering for subscription next week, seeking to become the fourth mutual fund house in India to list its shares on stock exchanges.

The company said the red herring prospectus that it filed with the Registrar of Companies has been approved, paving its way to hit the stock market.

The mutual fund house is a subsidiary of publicly listed Aditya Birla Capital Ltd, the financial services holding company of the diversified Aditya Birla Group led by billionaire Kumar Mangalam Birla.

Aditya Birla Capital’s board had approved taking the unit public on April 14 this year. The MF house filed its draft red herring prospectus with the Securities and Exchange Board of India five days later.

IPO snapshot

Opening date: September 29
Closing date: October 1
Anchor allotment date: September 28
Price band: Rs 695-712
Lot size: Minimum 20 shares, and multiples of 20 thereafter
Minimum investment required: Rs 13,900-14,240
Number of fresh shares to be issued: 28,50,880
Offer for sale by existing shareholders: 3,60,29,120 shares
Equity dilution: 13.5%
Total IPO size: Up to Rs 2,768.25 crore

Aditya Birla Sun Life AMC

The company is India’s fourth-largest mutual fund house by assets. It is a joint venture of Aditya Birla Capital and Canada’s Sun Life.

Aditya Birla Capital owns 51% of the AMC while Sun Life holds 49%. Their respective stake will fall to 50.01% and 36.49% after the IPO.

Aditya Birla AMC has hired 11 merchant banks to arrange the IPO. Kotak Mahindra Capital, BofA Securities and Citigroup Global Markets India are the lead bankers. The other bankers include IIFL Securities and Axis Capital.

Valuation, AUM comparison

Aditya Birla AMC will join three other mutual fund companies on the bourses—Nippon Life India MF (formerly Reliance Mutual Fund), HDFC MF, and UTI MF. 

Nippon Life floated its IPO in October 2017, HDFC MF in July 2018 and UTI AMC last September. HDFC AMC is the largest with a market value of Rs 69,036.49 crore. Nippon Life AMC is valued at Rs 27,435 crore and UTI AMC at Rs 14,098 crore. 

Aditya Birla AMC is targeting a valuation of Rs 20,500 crore at the upper end of its price band. However, market sources say it is likely to list at a premium and close the gap with Nippon Life.

Overall, India has almost three dozen mutual fund companies. The biggest MF is SBI Mutual Fund, with assets under management (AUM) of Rs 5.24 trillion at the end of June 2021. ICICI MF and HDFC MF are neck and neck, with an AUM of about Rs 4.3 trillion and Rs 4.2 trillion, respectively.

Aditya Birla AMC is ranked fourth and reported an AUM of Rs 2.75 trillion. In addition, it had also Rs 450 crore in assets under domestic fund of funds, according to the Association of Mutual Funds in India.

Nippon Life has an AUM of Rs 2.4 trillion as of June 30 and Rs 1,737 crore under local fund of funds. Kotak Mahindra MF and Axis MF are the other large asset managers in India with AUM of Rs 2.46 trillion and Rs 2.1 trillion, respectively, excluding fund of funds. UTI MF had an AUM of Rs 1.87 trillion at the end of June.