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HDFC AMC says shareholders diluted 12% through IPO, does not require capital

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HDFC Asset Management Company on Monday said that shareholders have diluted roughly 12 percent through the Rs 2,800-crore initial public offering (IPO), after shares of the company made a stellar debut at the bourses today, surging 58 percent against the issue price of Rs 1,100 per share.

HDFC Asset Management Company on Monday said that shareholders have diluted roughly 12 percent through the Rs 2,800-crore initial public offering (IPO), after shares of the company made a stellar debut at the bourses today, surging 58 percent against the issue price of Rs 1,100 per share.
In an exclusive interview to CNBC-TV18, Milind Barve, managing director, said, “This was a full offer-for-sale. So there is no part of the IPO where funds come into the AMC. The business does not need capital. In fact, the business has a very high return on weighted average networth as such and it keeps throwing free cash based on the profits we make. So it is not a business that needs further capital."
Barve said the minimum capital requirement for HDFC Asset Management Company is as low as Rs 50 crore, while in terms of networth, it's upwards of Rs 2,000 crore.
On stake holding front, Barve said, “HDFC Asset Management Company was a 60:40 joint venture between HDFC and Standard Life Investments. Before the IPO, there has been shareholders’ agreement by which it was agreed that when we achieve 25 percent dilution, which we are required to over three year time, HDFC will own eventually 50 plus 0.01 and Standard Life will have 24.99 percent and 25 percent will be with the public. So the final shareholding pattern that will emerge after three years, when we achieve the full 25 percent free float, will be 50.01, 24.99 and 25 percent with the public."
Speaking about assets under management (AUM) growth, he further mentioned that, “For the past few years, the industry has seen a very strong growth and this has come on the back of retail investors participating in mutual funds in a meaningfully different level. There used to be a time when people like us have been in this industry for many years now and if we collected Rs 15,000-18,000 crore in a year, we used to think this was a reasonably good year and now we collect Rs 11,000-14,000 crore per month – if you have seen the run rate in the last few months. So I think the industry has gone to a new level of growth and we have been as much a part of beneficiaries of that growth."
According to Barve, HDFC Asset Management Company is the second-largest in the total AUM and is the largest company in equity assets under management.
Speaking on the strength of the company, Barve said, "We are very focused on the retail business and more than 62 percent of our total AUM comes from the retail assets."

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