Aditya Birla Sun Life looks to raise Rs 5,000 crore through IPO

Aditya Birla Group is planning to list Aditya Birla Sun Life Asset Management through a Rs 5,000 crore initial public offering (IPO).

A Mint report stated that three people with direct knowledge of the matter said that the company aims to raise funds for its expansion. For the IPO, Aditya Birla Sun Life Asset Management has begun talks with probable merchant bankers. The IPO is expected to be launched in the June quarter.

The Mint report cited one of the sources as saying that in the IPO, the AMC (asset management company) is planning to provide almost 20 per cent to the public at a valuation of Rs 26,000 crore. According to the recent talks between probable merchant bankers and the promoters of AMC, the value of the business was estimated at approximately Rs 26,000 crore.

With around Rs 3 lakh crore of assets under management, Birla Sun Life AMC is India’s fourth-largest asset management firm. Aditya Birla Capital Ltd (ABCL) owns 51 per cent of the company and the rest is owned by Sun Life Financial Inc., a Canadian firm. The current market cap of Aditya Birla Capital is Rs 30,000 crore. It derives a major part of its market value (Rs 13,000-14,000 crore) from the AMC business alone.

According to one of the sources, capital-raising routes such as QIP (qualified institutional placement) and preferential allotment are also being taken into consideration for some of the subsidiaries of ABCL. Going by the capital market regulations, within three years of listing, every firm is required to have at least 25 per cent in public shareholding. Nevertheless, companies generally offer 10-15 per cent in an IPO. On the other hand, the promoters of Birla Sun Life AMC are preparing to mop up as much money as possible through the IPO, as the equity market is buoyant currently. Trade analysts have their eyes on the deal.