SBI says no plan to list asset management company despite attractive peer valuations

SBI has two other publicly traded subsidiaries: SBI Life Insurance and SBI Cards

State Bank of India (SBI) Chairman Dinesh Khara reiterated that the bank has no plan to list its AMC business - SBI Mutual Fund or SBI Funds Management despite premium valuations commanded by peers HDFC AMC and Nippon AMC.

In a post-result analyst conference call, Khara cited challenges faced by listed entities such as ICICI Securities, which is going through a de-listing process.

The public-sector lender reported an upbeat January-March (Q4FY24) performance, with net profit rising 24 percent YoY to Rs 20,698 crore, whereas net interest income climbed by 3.1 percent YoY to Rs 41,656 crore.

Chairman Khara said that he remains conscious of valuations grabbed by Nippon AMC and HDFC AMC and has no plans to list its asset management arm. "In these businesses, knowledge capital matters more than financial capital," said Khara, adding that he doesn't want SBI's other businesses to be called into question quarter by quarter.

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SBI had initially planned to take its mutual fund subsidiary public on December 15, 2021, with the aim of raising $1 billion. However, the plans were later shelved, as the bank deemed its capitalisation to be sufficient without any immediate need for fundraising.

If SBI's Mutual Fund listing had gone through, it would have joined the likes of HDFC AMC, UTI AMC, Nippon Life AMC, and Aditya Birla Sun Life AMC.

Currently, HDFC AMC trades at the highest price-to-earnings (PE) ratio of 39.6x, followed by Nippon Life at 32.8x, Aditya Birla Sun AMC at 20.03x, and UTI AMC at 14.93x.

At the bourses, shares of HDFC AMC have doubled in the past one year, whereas Nippon Life AMC stock more-than-doubled during the same period.

SBI has two other publicly traded subsidiaries: SBI Life Insurance and SBI Cards. The lender has three other additional ones that could be monetised: the mutual fund arm, the general insurance vertical, and the investment banking arm, SBI Caps.

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