SBI Funds IPO Could Be India’s Biggest AMC Listing At $1.5 Billion

India’s biggest asset manager, SBI Funds Management Ltd., is preparing to tap public markets in what could become the largest listing by an asset management company in the country.

According to people familiar with the development, the firm may file its draft red herring prospectus in the first half of March. The proposed initial public offering could raise as much as $1.5 billion, though discussions are still ongoing and final terms may change.

How Large Could The SBI Funds IPO Be?

People aware of the matter said the issue could value SBI Funds at up to $15 billion.

The implied valuation would be slightly below that of ICICI Prudential Asset Management Co., which currently stands at around $16.7 billion. ICICI Prudential had raised about $1.2 billion in a December listing, making it the second-largest asset manager in India.

SBI Funds manages assets worth ₹12.5 trillion and is jointly owned by State Bank of India and Amundi SA. The two shareholders had previously indicated plans to divest a combined 10% stake through the public offering.

While preparations are said to be underway, people familiar with the situation cautioned that deliberations remain ongoing. Details such as the final size, structure and timing of the IPO may still be adjusted.

Why Does The Timing Of This IPO Matter?

After two years of record fundraising, swings in the equity markets have begun to weigh on valuations and investor sentiment. Several recent public issues have drawn limited response, pointing to a more measured approach from both institutional and retail participants.

Against that backdrop, the response to what could be one of the largest financial services offerings will be closely watched by the market.

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What Should Investors Watch Ahead Of The Filing?

SBI Funds has lined up a broad group of investment banks to manage the proposed offering, including Kotak Mahindra Capital Co., Axis Bank Ltd., SBI Capital Markets Ltd., Motilal Oswal Investment Advisors Ltd., ICICI Securities Ltd., and JM Financial Ltd., along with the local arms of HSBC Holdings Plc, Jefferies Financial Group Inc., and Bank of America Corp.

The draft filing is anticipated to give investors a thorough breakdown of sales trends, earnings performance, asset growth, and the proposed share sale structure. Such disclosures will enable investors to better evaluate the company's valuation figures amid the increased sensitivity in pricing due to the market movements.

Given the size of the issue, institutional participation is likely to play a key role in price discovery.

Investors and other market players will also be interested in the initial orders to understand the demand for the big listings in the financial sector.

Sources:

ET

Moneycontrol

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