BackSBI to explore offloading 6% stake in MF arm via IPO
While the timing of the IPO is not certain, the expectation is that the bank could be looking at a listing by the first quarter of next financial year
PremiumMUMBAI : SBI Mutual Fund, the country’s largest asset management company, is preparing to go public. In a notice to the stock exchanges on Tuesday, State Bank of India said it plans to sell 6% of its stake in its mutual fund venture through an initial public offering (IPO). The asset manager’s joint venture partner, Paris-based Amundi, will sell a 4% stake in the IPO.
“The executive committee of Central Board of the Bank has accorded approval for exploring possibilities to offload 6% stake of the bank in SBI Funds Management Pvt. Ltd through the IPO route, subject to receipt of all regulatory approvals," it said in a statement to exchanges.
SBI currently holds 63% in SBI Funds Management, and Amundi Asset Management owns the remaining stake through unit Amundi India Holding.
Bloomberg reported in February that the country’s largest bank is looking to raise $1 billion through this IPO. SBI’s mutual fund is currently valued at about $6 billion, according to a senior official at State Bank of India.
While the timing of the IPO is not decided, the expectation is that the bank could be looking at a listing by the first quarter of the next financial year.
The mutual fund’s IPO process was delayed by the deadly coronavirus wave that struck India in March, which hampered in-office operations, Bloomberg reported, citing a person aware of the development. Final decisions on timing and valuation will be taken after underwriters are appointed, the report added.
“The main reason we are divesting is we are leading player in the market. Therefore, it is only right for investors to be part of the company. Secondly, employees have been issued ESOPs (employee stock option plans). They should also get price discovery. We don’t need capital, nor does our partner need capital. This is just for market positioning and for employees," the official said, requesting anonymity.
SBI’s plan to list the mutual fund arm is part of its strategy to monetize its non-core assets after divesting some of its stakes in life insurance and cards businesses last year. SBI raised over ₹10,340 crore through the listing of SBI cards and ₹8,400 crore through SBI Life IPO.
SBI’s mutual fund is the largest in India, with ₹5 trillion worth of assets under management, according to its website. According to an investor presentation, the asset manager posted a net profit of ₹862.7 crore for the year ended March.
The SBI mutual fund business would also be the third such listing, joining Aditya Birla AMC, UTI AMC, HDFC AMC and Nippon Life AMC.
Indian companies have raised more than $15 billion through initial share sales this year, a record for the country that has seen its main stock index rally 20% in one of Asia’s best performances.
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