Aditya Birla Sun Life AMC Ltd IPO

Competitive Strengths:

Some of the competitive strengths are as follows

Largest Non-Bank Affiliated Asset Manager in India:

Aditya Birla Sun Life AMC has maintained their position as the largest non-bank affiliated AMC in India by QAAUM since March 31, 2018 as well as among the four largest AMCs in India by QAAUM since September 30, 2011, according to the CRISIL Report. Their total QAAUM grew at a CAGR of 14.55% from ₹1,365.03 billion as of March 31, 2016 to ₹2,692.78 billion as of March 31, 2021, and further to ₹2,754.54 billion as of June 30, 2021. Further, the company’s equity-oriented MAAUM grew at a CAGR of 24.94% from ₹323.45 billion as of March 31, 2016 to ₹984.80 billion as of March 31, 2021, and further to ₹1,080.44 billion as of June 30, 2021. Their share of SIP AUM in total equity-oriented mutual fund AUM increased from 23.66%% as of March 31, 2016 to 38.09% as of June 30, 2021. In India, as equity-oriented schemes generally pay higher management fees compared to other schemes, a higher equity-oriented scheme mix would help them achieve higher revenues and profitability.

Growing Individual Investor Customer Base Driven by Strong Systematic Flows:

Aditya Birla Sun Life AMC’s individual investor MAAUM grew a CAGR of 18.38% from ₹546.13 billion as of March 31, 2016 to ₹1,333.53 billion as of June 30, 2021. The company’s individual investor MAAUM mix increased from 39.95% as of March 31, 2016 to 47.01% as of June 30, 2021, which was the second highest increase among the five largest AMCs in India by QAAUM, according to the CRISIL Report. The growth in Aditya Birla Sun Life AMC’s individual investor MAAUM and customer base has been largely driven by the development of their digital platforms, particularly in the utilization of systematic transactions by their customers, as well as the company’s focus on building relationships with distributors and wide channel distribution across smaller emerging markets, especially through deepening their B-30 cities presence.

Diverse Product Portfolio with superior Fund Performance:

As of June 30, 2021, Aditya Birla Sun Life AMC managed 112 mutual fund schemes, several of which have recorded superior performance compared to industry averages, as well as six domestic FoFs. The company also provides portfolio management services, offshore funds and alternative investments. Further, their fund offerings can be customized to meet an individual’s specific financial goals in the form of savings solutions, regular income solutions, tax saving solutions and wealth solutions. The company’s well-diversified product suite has allowed them to cater to the varying needs and risk profiles of their investors and effectively navigate: through changes in economic conditions

Pan-India Diversified Distribution Network:

As of June 30, 2021, Aditya Birla Sun Life AMC had a presence in 284 locations, comprising 194 branches in India (and three outside India), spread over 27 states and six union territories, which were supplemented by 90 EM representatives. Of these, 143 branches and all 90 of their EM representatives were located in B-30 cities. The company believes that the EM areas are untapped markets in India which have a high potential of assisting them in growing their AUM and expanding to new catchment areas without material capital expenditure. The company has a capability to build deep and strong relationships with distributors which is demonstrated by their highly diversified distribution network, which included over 66,000 KYD-compliant MFDs over 240 national distributors and over 100 banks/financial intermediaries, as of June 30, 2021. The diversification of their distribution base has led to a reduction in the concentration of AUM sourced from the top 10 distributors (in terms of AUM sourced) from 49% in the financial year 2016 to 37% in the financial year 2021.

Risk Factors:

Some of the risk factors are as follows

• Revenue and profit are largely dependent on the value and composition of the AUM of the schemes managed by them and any adverse change in their AUM may result in a decline in their revenue and profit.

• Underperformance of investment products in respect of which they provide asset management services could lead to a loss of investors, reduction in AUM and adversely affect their results of operations and reputation.

• The growth of their AUM may be affected due to the unavailability of appropriate investment opportunities or if they close or discontinue some of their schemes or services.

• Credit risks related to the debt portfolio of their funds may expose them to losses, which may have an adverse effect on their business.