SBI MF selects 7 investment banks for $1-billion public listing

SBI announced plans to list SBI Mutual Fund in December 2021.

India’s largest mutual fund house, SBI Mutual Fund, which clocked a monthly average assets under management (AUM) of Rs 6.2 lakh crore as of December 2021, has picked a syndicate of seven investment banks as it gears up to launch a mega IPO and raise up to $1 billion, multiple sources in the know told Moneycontrol.

The move comes on the back of healthy inflows of Rs 14,887 crore into equity mutual funds in January with the contribution of monthly systematic investment plans (SIPs) to mutual funds at Rs 11,517 crore for the month.

“SBI considers SBI MF as a jewel in its crown and is looking to unlock value via the listing. The proposed IPO is likely to be entirely a secondary sale of shares with SBI looking to sell 6 percent and Amundi looking to sell 4 percent,” said one of the persons cited above. SBI MF is a joint venture between SBI and leading French insurer Amundi Asset Management.

If the listing plans of SBI Mutual Fund fructify, it will become the fifth domestic mutual fund player to make a Dalal Street debut. HDFC Asset Management, UTI Asset Management Company, Nippon Life India Asset Management and Aditya Birla Sun Life AMC are the other listed peers. The last IPO from the SBI stable was from SBI Cards & Payment Services, which launched in March 2020, just before the outbreak of COVID-19 and raised around Rs 10,354 crore.

According to a second person familiar with the listing plans of the mutual fund major, “the plan as of now is to raise up to $1 billion via the IPO; however, no final call has been taken and the size may vary at a later stage. Investment banks BofA Securities, Citi, HSBC Securities, Axis Capital, Kotak Mahindra Capital, SBI Capital and BNP Paribas have been shortlisted.”

Two other persons confirmed the syndicate of i-banks and added that the launch of the proposed IPO was likely in H1 FY23.

All the four persons cited above spoke to Moneycontrol on condition of anonymity.

Moneycontrol could not elicit an immediate response from SBI Mutual Fund and will update this article as soon as we hear from the firm. HSBC Securities declined to comment in response to an email query from Moneycontrol while a spokesperson for Amundi Asset Management said the query should be directed to SBI. BNP Paribas was unavailable for an immediate comment while responses from Citi, BofA Securities, Kotak Mahindra Capital, Axis Capital and SBI MF are awaited.

On December 15, 2021, SBI announced plans to list SBI Mutual Fund. "The Executive Committee of Central Board of the Bank has accorded approval for exploring possibilities to offload 6 per cent stake of the Bank in SBI Funds Management Private Limited through IPO route, subject to receipt of all regulatory approvals," the lender had said in a disclosure.

In an interview with the Economic Times dated December 16, SBI MD Ashwani Bhatia had said, “Our AUM has grown. We have beaten the markets. We have gained market share and we are at about 17 percent and as a fund house, the funds they manage is around Rs 15 lakh crore which is not a small statement. SBI Mutual Fund is a leader not only in managed funds but also in the passives and the PMS pieces.”

When asked about the timing of the IPO, Bhatia added, “the first half of FY23 would be a right assessment.”

KNOW MORE ABOUT IPO-BOUND SBI MF

Vinay M Tonse is the MD & CEO of SBI MF and according to the firm’s website, the joint venture between SBI and Amundi Asset Management was struck back in April 2011.

The website says, “SBI currently holds 63% stake in SBI MF and 37% stake is held by AMUNDI Asset Management through a wholly owned subsidiary, Amundi India Holding. Initially this 37% holding was held by Societe Generale Asset Management S.A., a subsidiary of Societe Generale S.A which was transferred to Amundi in June 2011 with due approval of SEBI pursuant to SEBI (Mutual Funds) Regulations, 1996. AMUNDI Asset Management shall provide strategic support to the company."

According to the firm’s annual report ( 2020-2021), its total income stood at Rs 1,568 crore and profits stood at Rs 860 crore. In terms of the asset mix (as a percentage of the AUM), equity occupied 55.9 percent, liquid component consisted of 16.1 percent and fixed income at 27.9 percent. The annual report also indicated that SBI MF’s SIP book had grown 5x times from FY2016 to FY2021 and stood at Rs 1382 crore.

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