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HDFC Asset Management Company Ltd’s initial public offering was fully subscribed on the first day of bidding.
The Rs 2,800-crore offer of India’s second-largest asset manager received demand for 1.03 times the shares on offer as of 5:00 pm on Wednesday, according to data available with stock exchanges. It was driven by qualified institutional buyers and retail investors.
The portion reserved for QIBs was subscribed 1.19 times. The retail investors’ portion was subscribed 1.34 times. High-net-worth individuals subscribed to 55 percent of the shares allocated to them.
HDFC Ltd. and Standard Life are selling a little over 2.5 crore shares at Rs 1,095-1,100 apiece. At the upper end of the price band, the company will be valued close to Rs 23,319 crore.
HDFC AMC had raised Rs 731.9 crore from anchor investors at Rs 1,100 apiece. Foreign investors in the anchor allotment included DSP Blackrock, Goldman Sachs, Fidelity Investments. Domestic investors who participated were ICICI Prudential Capital, Aditya Birla Sunlife, Axis Mutual Fund.
HDFC AMC is the country’s largest equity-oriented asset management company. More than 97 percent of the total assets under management are in mutual funds, while the rest are under other managed accounts. As on 30 June, its assets under management stood at Rs 3,07,585 crore.
It has 209 branches and 65,000 distribution partners in over 200 cities. The company manages 27 equity-oriented, 98 debt, three liquid and five other schemes.
HDFC AMC – the most profitable asset management company in India – has seen a steady rise in the number of customers and the average transaction size.
Reliance Nippon Life Asset Management Ltd is the only direct listed peer of HDFC AMC. But it has 40 active unlisted asset management peers – both private and public. ICICI Prudential Asset Management Company Ltd is the largest AMC in India. Reliance Nippon is the fourth largest.
HDFC AMC’s growth rates were better than its listed peers, but lagged behind ICICI Prudential AMC.
The company’s net profit as a percentage of assets under management was the highest at 0.24 percent on higher revenue and lower expenses. All the three unit metrics – revenue, net profit and total expenses as a percentage of assets under management – declined for the financial year through March 2018.
(As % Of AUM)
HDFC AMC’s return on equity and return on asset were better than that of its listed peer but fell short of ICICI Prudential AMC. The company’s return on equity declined to 33.4 percent over last year, according to BloombergQuint’s calculations.
Earnings per share for the previous financial year stood at Rs 34. At the upper end of the price band, the price-to-earnings multiple is at 32.3, according to BloombergQuint’s calculations.
The company’s market capitalisation as a percentage of assets under management is expensive compared to Reliance Nippon.
Angel Broking
MOSL
Choice Broking
(This story has been updated to reflect the IPO has been fully subscribed.)
(This story was originally published on BloombergQuint.)
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