Aditya Birla Sun Life AMC IPO plans planning to raise Rs 2768 crore in the IPO which consists of entirely an offer for sale. This will be the fourth IPO by a domestic mutual fund AMC. Currently, HDFC AMC, Nippon India AMC, and UTI AMC are listed players in this space
Aditya Birla Sun Life AMC IPO Details:
|IPO Opens||Wed, 29th Sept, 2021|
|IPO Closes||Fri, 1st Oct, 2021|
|Issue Details||OFS upto 3,88,80,000 Eq Shares|
|Face Value (₹)||₹ 5/-|
|Issue Size (₹ Cr)||₹ 2,702 – 2,768 Cr|
|Bid Lot||20 Shares|
|Price Band||₹ 695 – 712|
|ABCL Shareholders||1,944,000 Shares|
|QIB||50% of the net offer|
|NIB||15% of net offer ( ~ 394.48 Cr)|
|Retail||35% of net offer ( ~1,29,27,600 Shares; 920.45 Cr)|
|Applications for 1x Retail||6.5 Lacs|
|Registrar||KFin Technologies Pvt. Ltd.|
Video Presentation Aditya Birla Sun Life AMC IPO Review and Thoughts on Listing
- ANCHOR ISSUE: Ahead of its IPO Aditya Birla Sun Life AMC raised Rs 788.95 crore from 50 anchor investors. Marquee foreign investors include names like HSBC, International Monetary Fund, Abu Dhabi Investment Authority, Morgan Stanley Asia, BNP Paribas, and Societe Generale. Domestic investors, including ICICI Prudential, HDFC Mutual Fund, SBI MF, Axis MF, SBI Life Insurance Company, HDFC Life Insurance Company, ICICI Prudential Life Insurance, UTI MF, Tata AIG General Insurance, Kotak Mutual Fund, IIFL Special Opportunities Fund, Abakkus Growth Fund, Max Life Insurance, and Reliance General Insurance etc.
About Aditya Birla Sun Life AMC Ltd.
- Aditya Birla Sun Life AMC is a joint venture between Aditya Birla Capital and Sun Life AMC. Started in 1994.
- ABSL AMC is primarily the investment manager of Aditya Birla Sun Life Mutual Fund, a registered trust under the Indian Trusts Act, 1882.
- Currently, ABCL holds a 51 per cent stake in the AMC, while Sun Life holds the remaining 49 per cent.
- Following the IPO, total promoter stake in the fund house would fall from 100 per cent at present to 86.5 per cent.
- Aditya Birla MF is the country’s largest non-banking affiliated fund house with assets under management (AUM) of more than Rs 3 trillion as of July 2021.
- Since its inception, the fund house has established a geographically diversified pan-India distribution presence covering 284 locations spread over 27 states and six union territories.
- As of June 2021, the company managed 118 schemes comprising 37 equity schemes, 68 debt schemes, two liquid schemes, five ETFs (exchange-traded funds) and six domestic FoFs (fund of funds).
Aditya Birla Sun Life AMC IPO: Financials
|Particulars / (₹ In Cr)||2021(03)||2020(03)||2021(12)||2020(12)||2019(12)|
|Revenue from Operations||333.24||256.62||1,191.03||1,233.84||1,406.07|
|Revenue Growth (%)||29.86%||–||-3.47%||-12.25%|
|EBITDA as stated||216.2||141.13||738.89||702.69||683.9|
|Net Profit for the Period||154.94||97.35||526.28||494.4||446.8|
|Net Profit as % to revenue||46.50%||37.94%||44.19%||40.07%||31.78%|
|Equity Share Capital||144||18||18||18||18|
|EPS -Basic (₹)||5.38||3.38||18.27||17.17||15.51|
|Net Asset Value (₹)||62.57||49.15||59.19||45.72||42.38|
|PE (Fy 22 annualized EPS)||33.09|
|Market Cap in cr.||20506|
- Aditya Birla Sun Life AMC manages 112 mutual fund schemes as of June 2021, several of which have recorded superior performance compared to industry averages. It also manages six domestic FoFs.
- The company’s flagship schemes include Aditya Birla Sun Life Frontline Equity Fund and Aditya Birla Sun Life Corporate Bond Fund.
- Its frontline equity fund has grown to become the fourth largest among the large cap equity schemes of the top 10 AMCs in India, in terms of QAAUM.
- Meanwhile, its corporate bond fund is the third largest corporate bond fund in India, in terms of QAAUM.
- 13 of its top open-ended schemes accounted for 64.4% of QAAUM and have outperformed peers under the 10-year annualized return horizon.
- Any underperformance of investment products tarnishes the image of AMC and can lead to loss of investors and it can affect the business.
- Credit risks related to debt portfolio •Company’s market share as a % of mutual fund industry AUM, has been showing a downtrend.
- Regulatory risks such as cap on fees and commissions, cap on fund expenses, re-categorization of schemes by the market regulator.
- With 44 AMCs operating at present, there is intense competition from new entrants and from AMCs with access to captive Banking channels.
Aditya Birla Sun Life AMC IPO: Assessment
- Mutual funds are an under penetrated market in India.
- Mutual funds are getting investor attention as a means to beat inflation.
- AMC industry is on a high growth path and given the under penetration in the industry, there is still a long way to go
- SIPs has become t he way of life for most of the investors.
- For Aditya Birla Sun Life AMC, share of the most-profitable equity segment is at 37%, lower than industry average of 41%, impacting profitability.
- Aditya Birla’s PAT as a % to AUM is ~20 bps, as against 25-30 bps for Nippon and even higher for HDFC AMC.
- Non-bank AMCs face stiff competition from bank-sponsored AMCs. Despite an open architecture framework among private banks, ground situation is different
- Company’s share of banks in equity mutual funds distribution is only 12%.
- AMC business is cyclical in the sense that it performs poorly during bear phase of markets
- The increase in popularity of low margin products like ETFs and index funds has reduced the profitability.
- Aditya Birla Sun Life AMC posted a profit after tax (PAT) of Rs 155 crore in the first quarter of the current fiscal, a year-on-year jump of 59 per cent.
- Asset management is an asset-light business, with good operating leverage.
- The AMC has been around for many years and enjoys the backing of reputed Fortune 500 industrial conglomerate.
- I intend to apply in Aditya Birla Sun Life AMC IPO.
- May give some Listing Gains.
- In my view the downside if any is limited
- due to good prospects for the industry and
- reasonably large size of AUM of the company which results in operating leverage.
- If there is good response to IPO, Allotment is likely to be 1:5 or 1:6 in retail category due to relatively good issue size.
- Aditya Birla Sun Life AMC was last reported to be commanding a GMP of abour Rs. 50.
Thoughts on Listing
- Listing price is determined by a mix of fundamentals, speculative forces, changes in industry dynamics and market conditions at that point.
- It is bit early, but Aditya Birla Sun Life AMC has been commanding a moderate GMP. In recent past we have seen that GMP is losing its ability to significantly determine listing price. Example CarTrade , Krsnaa Diagnostics and many others.
- I expect Aditya Birla Sun Life AMC IPO to stand its ground even if the market shows some signs of small weakness. A larger weakness will have a negative impact on the price.
- When UTI AMC IPO came for listing it was demanding a PE of 25X against 33 to 36x by Nippon & HDFC AMC respectively. It listed a discount.
- Subsequently led by good performance & change in market sentiments, it is now commanding almost same PE of 25 X, even as its market price has doubled due to better earnings. Nippon and HDFC are commanding PE of 38.5x and 50x respectively.
- Thus market sentiment play a big role.
- Given the significant potential in Mutual Fund Industry in the country, company holds promise.
- If markets are relatively stable, a 5-15% uptick on listing may happen.
- Among the listed players HDFC AMC may continue to lead the pack in term of valuations.
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.