ABSL IPO: Apply or Not?
India's fourth-largest asset management company (AMC) - Aditya Birla Sun Life is launching its initial public offering (IPO) on Wednesday, September 29. This is India’s 43rd IPO offering of the year 2021.
Let’s first know the Company. Aditya Birla Sun Life AMC was founded in 1994 as a joint venture between ABCL and Sun Life AMC.
As of December 31, 2020, the company has a total AUM of $2,736.43 billion in mutual funds (excluding domestic FoFs), portfolio management services, offshore, and real estate solutions. The company administered 135 schemes, including 35 equity, 93 debt, 2 liquid schemes, 5 ETFs, and 6 domestic FoFs.
According to CRISIL, the company's monthly average assets under management (MAAUM) from institutional investors was $1,412.43 billion as of December 31, 2020, ranking fourth among its peers.
Several areas of the company's operations have been automated and computerized.
Let’s see below the Competitive advantages the company offers.
India's largest non-bank affiliated asset management firm.
With seasoned promoters, the brand is well-known and trusted.
The customer base is rapidly expanding.
Product portfolio with a wide range of options and creative schemes
The objects of the Offering:
The IPO's net proceeds will be used for the following purposes:
Obtain the advantages of listing the Equity Shares on stock exchanges. Execute the Offer for Sale of up to 38,880,000 Equity Shares by the Selling Shareholders.
The company aims to raise Rs 2,768.3 crore through a public offering by its two promoters. As a result, no revenues from the share sale will be received by the firm.
IPO Dates & Numbers For its share sale, the company has set a price range of Rs 695-712.
Aditya Birla Capital and Sun Life India's proposed sale of equity shares in the IPO will amount to up to 13.50% of Aditya Birla Sun Life AMC's paid-up share capital.
Investors can bid for a minimum of 20 equity shares and then in multiples of 20 equity shares.
The issue's Anchor investors buy shares worth Rs 800 crore at upper price band. The Anchor Investors include
Kotak Mahindra Capital Company, BofA Securities, Citigroup Global Markets India, Axis Capital, HDFC Bank, ICICI Securities, IIFL Securities, JM Financial, Motilal Oswal Investment Advisors, SBI Capital Markets, YES Securities (India).
KFin Technologies Private Limited is the IPO's registrar.
The IPO will be allocated to 3 quota.
50% of the issue size has been set aside for qualified institutional buyers (QIBs). 35% for retail investors. 15% for non-institutional investors.
ABSL Shareholders get added advantages as below.
Individuals and HUFs with Aditya Birla Capital (ABCL) shares in their demat account as of September 22, 2021 (the RHP filing date) are eligible to apply for the Aditya Birla Sun Life AMC Ltd IPO under the shareholders quota.
ABCL shareholders are allowed to apply in both the Retail (up to Rs 2 lakhs) and Shareholder (up to Rs 2 lakhs) categories (up to Rs 2 lakhs).
What Analysts has to say !!!
Below is the list of Analysts & their say on the IPO
Anand Rathi, suggests that you subscribe.
Given that the company is the largest non-bank affiliated AMC and one of the four largest AMCs in India, with well-known promoters, a growing individual investor customer base, a diverse product portfolio, and a high RoNW (return on net worth) of 30.87 percent in FY21, we rate this IPO as Subscribe.
Reliance Securities: Subscribe with a long-term perspective
When compared to peers, the company's equity AUM exposure is 36%. However, it has done exceptionally well in improving its operational efficiency over the years. Sustained strong cash flow generation against a backdrop of continued penetration increase and improvement in equity AUM is likely to ensure a healthy payout in the future. From a long-term perspective, we recommend Subscribing to the issue.
Religare Broking: Long-term prospects
ABSL AMC stands to benefit from the industry's strong prospects. It has a well-known and experienced promoter group that will help to build customer trust and increase SIP inflows. The company's AUM share has steadily increased, and its overall performance has been strong. From a long-term standpoint, we are optimistic about the company.
Grey Market !!!
According to IPO Watch and IPO Central data, its equity shares are trading in grey markets at Rs 757 and 772, a premium of Rs 45 and Rs 60, or 6.3 percent and 8.4 percent, respectively, over the upper price band of Rs 712.
Experts believe the low grey market premium is due to the issue of being fairly priced and being a pure offer for sale.
Given the company's attractive pricing, good return on equity, wide product portfolio, and well-known promoter group, analysts recommend subscribing to the IPO.
ABSL will be a fantastic opportunity to participate in a developing financial services company.