HDFC Asset Management Company, the second largest fund house, today said its promoters will dilute 12.01 per cent stake through the Rs 2,800-crore offer-for-sale issue that opens on July 25 at a price band of Rs 1,095-1,100 per share.
While main promoter HDFC will dilute 4.08 per cent to the public through the offer, foreign partner Standard life will sell 8.1 per cent of its holding in the fund house that is the largest among the private players when it comes to equity investment.
Post-issue, excluding reserved portion for employees and shareholders, HDFC's shareholding will come down to 52.92 per cent from 56.97, while that of Standard life will be down from 37.98 to 30.03 per cent.
Deepak Parekh, the chairman of HDFC Group, said the offer and the net offer constitute 12.01 per cent and 10.46 per cent of post-offer paid-up equity capital, respectively.
He said with the AMC listing, the HDFC group has five publicly traded companies - HDFC, HDFC Bank, HDFC life and Gruh Finance.
But Parekh ruled out listing of the general insurance arm, HDFC Ergo, in the medium term, saying the company needs to grow much bigger for a public float.
The promoters will sell up to 25,457,555 equity shares of face value of Rs 5 each for cash through an offer for sale of up to 8,592,970 shares by HDFC and up to 16,864,585 shares by Standard life Investments, he said.
The offer, that closes on July 27, comprises a net offer to the public of up to 22,177,555 shares, a reservation of up to 0.15 per cent of the post-offer paid up equity capital for its employees; 0.26 per cent for HDFC employees, up to 1.13 per cent for HDFC shareholders.
HDFC Mutual Fund has for long been the most profitable fund house in the country in terms of net profit since fiscal 2013. As of March 2018, its AUM stood at Rs 2.92 trillion, of which 62 per cent or Rs 1.5 trillion is by retail investors, making it the largest in this category.
With 13 per cent market pie, HDFC AMC is the second largest fund house in the private sector, just behind ICICI Prudential AMC which has 13.3 per cent market share.
Kotak Mahindra Capital, Axis Capital, DSP Merrill lynch, Citi India, ClSA India, HDFC Bank, ICICI Securities, IIFl Holdings, JM Financial, JP Morgan India, Morgan Stanley India and Nomura Financial India are managing the issue which will be listed on the BSE and the NSE.
This will be the second AMC to hit the markets after Reliance Nippon AMC that raised Rs 1,542 crore last year.
last month, markets regulator Sebi had given clearance to the fund house to float the share sale after keeping the IPO proposal in abeyance for examination of past violations.
Earlier, Sebi had asked HDFC AMC to cancel the shares allotted to distributors and advisers. It had directed the fund house to return the money it had collected from distributors and independent financial advisers, at the rate of 12 per cent, according to industry insiders.
The fund house had made a private placement of shares to the tune of Rs 150 crore to 140 distributors in April this year. These shares were offered at Rs 1,050 per share. Though it had offered stocks to nearly 200 distributors, only 140 subscribed, they added.
Today the company said the said shares were then sold to global investor KKR.
Milind Barve, chief executive officer, HDFC AMC, said, even at Rs 23 trillion of assets under management, the contribution of MF into the GDP is only 11 per cent, while the global average is over 42 per cent. When it comes to the share of MFs in the market capitalisation, it is a paltry 5 per cent, which only proves the huge market potential.
"With Rs 1.49 trillion of our Rs 2.92 trillion assets under management in equity schemes, we are the largest in the segment," he said.