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Aditya Birla Sun Life AMC IPO: Management says valuation based on asset mix, profit margin and peer comparison

market | Sept 24, 2021 6:02 PM IST

Aditya Birla Sun Life AMC IPO: Management says valuation based on asset mix, profit margin and peer comparison

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Aditya Birla Sun Life AMC on Friday said it has fixed a price band of Rs 6,95,712 a share for its over Rs 2,768crore initial share sale. The three-day initial public offering (IPO) will open for subscription on September 29 and conclude on October 1, the company announced in a virtual press conference. . Nisha Poddar caught up with MD and CEO A Balasubramanian and started by asking about the key factors behind the IPO valuation.

Aditya Birla Sun Life AMC on Friday said it has fixed a price band of Rs 695-712 a share for its over Rs 2,768-crore initial share sale. The three-day initial public offering (IPO) will open for subscription on September 29 and conclude on October 1, the company announced in a virtual press conference.

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A Balasubramanian, MD & CEO, Aditya Birla Sun Life AMC spoke to CNBC-TV18 and shed light on the valuation picture.
"With respect to the valuation, the overall asset mix that we have as an AMC compared to the competing fund houses in the country, and also the AMC that is there in the listed space, and I look at actually the profit that has been generated vis-à-vis the other companies and the overall AUM mix between equity and fixed income, and also profitable high margin assets that we have, and the large pool of customer base that we have built over a period of time," said Balasubramanian.
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The initial share-sale is entirely an offer for sale, wherein two promoters -- Aditya Birla Capital and Sun Life (India) AMC Investments -- will divest their stake in the asset management firm. The IPO of up to 3.88 crore equity shares comprises an offer for sale of up to 28.51 lakh equity shares by Aditya Birla Capital and up to 3.6 crore equity shares by Sun Life AMC.
On growth prospects, Balasubramanian said, “Clearly if you look at past trend, just about 2016 we were about 24 percent of total assets under management coming from equity, the last almost six years, we have grown from 24 percent to 38 percent as it stands today 38 percent of our total assets come from equity. Our overall commitment actually to build our equity to a large size that remains even going forward.”
The proposed sale of equity shares by Aditya Birla Capital and Sun Life India in the IPO will together constitute up to 13.50 per cent of the paid-up share capital of Aditya Birla Sun Life AMC. At the upper end of the price band, the initial share sale is expected to fetch Rs 2,768.25 crore.
Aditya Birla Sun Life AMC, the investment manager of Aditya Birla Sun Life Mutual Fund, is a joint venture between the Aditya Birla Group and the Sun Life Financial Inc of Canada. Asset management firms like Nippon Life India Asset Management, HDFC AMC and UTI AMC are already listed on the stock exchanges.
Aditya Birla Sunlife MF, the fourth largest fund house, had an average asset under management of Rs 2.93 lakh crore as of the June quarter. At present, it manages 118 schemes. Since its inception in 1994, the fund house has established a geographically diversified pan-India distribution presence covering 284 locations spread over 27 states and six union territories.
Half of the issue size has been reserved for qualified institutional buyers (QIBs), 35 per cent for retail investors and the remaining 15 per cent for non-institutional investors. Investors can bid for a minimum of 20 equity shares and in multiples of 20 equity shares thereafter.
Kotak Mahindra Capital Company, BofA Securities, Citigroup Global Markets India, Axis Capital, HDFC Bank, ICICI Securities, IIFL Securities, JM Financial, Motilal Oswal Investment Advisors, SBI Capital Markets and YES Securities (India) are the merchant bankers to the issue. The asset management company, which had filed preliminary IPO papers with Sebi in April, obtained its clearance in August.
For full management commentary, watch the video.
With text inputs from PTI
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