SBI Mutual Fund Eyes ₹13,000 Crore IPO; DRHP Filing Expected Soon

India’s largest asset management company, SBI Fund Management, is preparing to take a major step toward the capital markets with plans for a massive initial public offering (IPO). According to reports, the fund house may submit its draft red herring prospectus (DRHP) to the market regulator by the end of this month, although the timeline could be pushed back slightly depending on audit developments.

Possible Delay Due to Fresh Audit Review

Sources indicate that the company had originally aimed to file the DRHP by the end of February. However, that schedule was postponed after the firm conducted a comprehensive audit review.

If a fresh audit process is initiated, the filing may be delayed by another two to three months. Despite this possibility, preparations for the IPO remain on track as the asset management giant moves closer to entering the public markets.

Valuation Target Around ₹1.3 Lakh Crore

The upcoming IPO is expected to value SBI Fund Management at approximately ₹1.3 lakh crore. Interestingly, shares of the unlisted entity are already trading at an implied valuation close to ₹1.5 lakh crore in the unlisted market.

At the proposed valuation, the company would command a price-to-earnings (P/E) ratio of about 51 times, slightly above the valuation of its listed competitor, ICICI Prudential Asset Management Company, which currently trades at around 50.4 times earnings.

If the valuation holds, the IPO could become one of the biggest listings in India’s financial services sector, with an estimated issue size of around ₹13,000 crore. The offering would also be significantly larger than the IPO of ICICI Prudential Asset Management Company, exceeding it by roughly 30%.

Entire Issue to Be an Offer for Sale

The proposed IPO will be structured entirely as an Offer for Sale (OFS), meaning the company itself will not raise fresh capital. Instead, existing shareholders will reduce their holdings through the public issue.

The majority stakeholder, State Bank of India, is expected to divest around 6.3% of its stake, potentially raising over ₹8,000 crore from the sale.

Meanwhile, French asset management firm Amundi, which is also a key shareholder, may sell shares worth less than ₹5,000 crore as part of the offering.

Advisors and IPO Expenses

To manage the public issue, the company has appointed a large consortium of advisors. The list includes major investment banks such as Bank of America, Kotak Mahindra Capital Company, and HSBC, among others.

Despite the large size of the IPO, the company intends to keep the associated expenses relatively low. Reports suggest that the IPO process could cost less than ₹75 crore, which is nearly half the amount reportedly spent by ICICI Prudential Asset Management Company during its public listing.

Summary

• SBI Fund Management is planning a ₹13,000 crore IPO, potentially one of the largest in India’s financial services sector.
• The company may file its DRHP soon, although the timeline could shift due to audit considerations.
• The IPO is expected to value the company at around ₹1.3 lakh crore, with a P/E ratio of about 51x.
• The entire issue will be an Offer for Sale, with State Bank of India and Amundi reducing their stakes.

The IPO process is estimated to cost under ₹75 crore, making it relatively cost-efficient compared with similar listings.

Disclaimer

This article is based on publicly available information and official statements. The content is intended for informational purposes only. The publication does not independently verify third-party claims or assertions mentioned in the developments.