Aditya Birla Sun Life AMC makes dull stock exchange debut

Aditya Birla Sun Life Asset Management Co Ltd made a lackluster debut on stock exchanges on Monday as its shares listed at its initial public offering price before inching lower.

Shares of the mutual fund house began trading on the BSE at Rs 712 apiece, the same as the issue price. The shares touched a high of Rs 721 and a low of Rs 700 apiece in the first few minutes of trade.

Analysts say a not-so-exciting response to the IPO and the fact that the issue was entirely an offer for sale could be among the reasons for the muted listing.

The tepid opening comes after Aditya Birla Sun Life AMC's IPO was subscribed 5.25 times, thanks mainly to qualified institutional buyers’ bidding for more than 10 times the portion reserved for them. The quota set aside for non-institutional investors was covered 4.4 times while retail investors’ portion was subscribed 3.24 times.

The mutual fund house is a subsidiary of publicly listed Aditya Birla Capital Ltd, the financial services holding company of the diversified Aditya Birla Group led by billionaire Kumar Mangalam Birla.

Aditya Birla Capital’s board had approved taking the unit public on April 14 this year. The MF house filed its draft red herring prospectus with the Securities and Exchange Board of India five days later.

The IPO had opened on September 29 and closed on October 1. This makes Aditya Birla AMC the fourth mutual fund house in India to go public. The IPO was a complete offer for sale by Aditya Birla Capital and its Canadian partner Sun Life. The total IPO size was Rs 2,768.25 crore.

Aditya Birla Capital owned 51% of the AMC while Sun Life held 49% before the IPO. Their respective stake has fallen to 50.01% and 36.49% after the IPO.

Aditya Birla Sun Life AMC’s valuation, AUM comparison

The company is India’s fourth-largest mutual fund house by assets. It joins three other mutual fund companies on the bourses—Nippon Life India MF (formerly Reliance Mutual Fund), HDFC MF, and UTI MF.

Nippon Life floated its IPO in October 2017, HDFC MF in July 2018 and UTI AMC last September. HDFC AMC is the largest with a market value of Rs 62,064 crore. Nippon Life AMC is valued at Rs 27,774 crore and UTI AMC at Rs 13,257 crore.

Aditya Birla AMC was targeting a valuation of Rs 20,500 crore at the upper end of its price band. However, it is currently valued a tad lower than this level.

Overall, India has almost three dozen mutual fund companies. The biggest MF is SBI Mutual Fund, with assets under management (AUM) of Rs 5.24 trillion at the end of June 2021. ICICI MF and HDFC MF are neck and neck, with an AUM of about Rs 4.3 trillion and Rs 4.2 trillion, respectively.

Aditya Birla AMC is ranked fourth and reported an AUM of Rs 2.75 trillion. In addition, it had also Rs 450 crore in assets under domestic fund of funds, according to the Association of Mutual Funds in India.

Nippon Life is ranked sixth with an AUM of Rs 2.4 trillion as of June 30 and Rs 1,737 crore under local fund of funds. Kotak Mahindra MF and Axis MF are the other large asset managers in India with AUM of Rs 2.46 trillion and Rs 2.1 trillion, respectively, excluding fund of funds. UTI MF had an AUM of Rs 1.87 trillion at the end of June.