Aditya Birla Sun Life AMC IPO: All you need to know

Aditya Birla Sun Life AMC Limited (ABSLAMC) is an asset management company (AMC) founded in 1994. It is a joint venture between Aditya Birla Capital Limited and Sun Life (India) AMC Investments Inc. ABSLAMC primarily manages the investments of Aditya Birla Sun Life Mutual Fund. Its mutual fund segment offers equity and fixed income products. Apart from the mutual fund, it provides portfolio management services offshore and real estate offerings. 

The company is aiming to raise ₹₹2,768 crore through the IPO.

Here’s everything you need to know about the ABSLAMC IPO:

Offer details

• IPO Size: ₹2,768crore
• Fresh issue: Nil
• Offer for sale: ₹2,768 crore
• Dates: 29 Sept to 1 Oct
• Price band: ₹695–₹712
• Lot size: 20 shares

The company shares will be listed at the BSE and NSE. The face value of each share is ₹5.

The promoters of ABSLAMC are Aditya Birla Capital and Sun Life (India) AMC Investments. The IPO will be executed through the offer for sale route. The two promoters will divest their stake in the firm by selling 28.51 lakh and up to 3.6 crore equity shares respectively, bringing the total to 3.88 crore equity shares. This constitutes up to 13.5%of the paid-up share capital of ABSLAMC.

The objective of the IPO

Following are the objectives of launching this IPO:

-To achieve the benefits of listing their shares on the stock exchanges

-To carry out the Offer for Sale of up to 38,880,000 equity shares by the Selling Shareholders

Company fundamentals

Here’s the shareholding pattern of Aditya Birla Sun Life AMC:

Financial Information

Strengths

• It’s a joint venture between two companies, which have a strong presence in domestic and international markets.
• It is the largest non-bank affiliated AMC and the fourth largest AMC in India based on assets under management as of June 2021. 
• It has established a pan-India distribution network with 194 branches. 

Industry outlook

While the asset management industry in India is still in its infancy stage compared to the rest of the world, the quarterly average assets under management are projected to grow at a compounded annual growth rate (CAGR) of 11-13% between June 2021 and March 2026. Currently, the country’s AMCs manage assets under management worth ₹33 lakh crore, of which around 80% are owned by the top 10 AMCs. The ABSLAMC is the fourth-largest player in the pack. Overall, the market is poised to witness a strong increase in systematic investment plans (SIP) as well as the use of mutual funds as a vehicle to funnel household savings. 

Opportunities

• The growing asset management industry creates scope for innovative product bundles that cater to the specific needs of varied customer bases and their demand for higher returns.

• The SEBI and the Association of Mutual Funds in India (AMFI) have launched several initiatives for India’s financial services industry to adopt robust technologies that will lead to an increase in the penetration of asset management products.

• The SEBI has introduced numerous regulations to uphold transparency and protect the interests of investors. Increasing trust will drive greater adoption of investment products. 

Threats and risks

• The asset management industry is highly competitive and ABSLAMC faces stiff competition from other players such as HDFC AMC, ICICI Prudential AMC  and SBI Fund Management.
• The revenue and profit are largely dependent on the value and composition of the AUM and any adverse change may result in a decline in revenue and profit. 
• The pandemic has negatively impacted the average household’s ability to invest, in the near term. 

To summarize, with its leading position and strong brand equity ABSLAMC is well positioned to ride the expected growth in the asset management industry.