HDFC Mutual Fund allots Rs 7.3 billion shares to anchor investors

HDFC Mutual Fund (MF) on Tuesday allotted shares worth Rs 7.3 billion to anchor investors ahead of its Rs 28-billion initial public offering (IPO).

The shares were allotted at Rs 1,100 apiece — the top-end of the price band. Some of the investors’ allotted shares include Capital, Fidelity, Blackrock and Temasek.

Among domestic institutions, ICICI Prudential MF, Reliance MF, SBI MF and Kotak MF got allotment under the anchor portion. Sources say the demand has exceeded the supply by several times for the anchor segment.  HDFC MF’s three-day IPO opens on Wednesday. The IPO is entirely an offer for sale of 25.5 million shares belonging to HDFC and Standard Life Investment. HDFC and Standard Life are paring 4.05 per cent and 7.96 per cent stake, respectively, in the IPO.

At the top-end, the issue size works out to Rs 28 billion. The IPO values HDFC MF, which manages assets worth over Rs 3 trillion, at Rs 233 billion. 

Reliance Nippon MF, which manages assets worth Rs 2.4 trillion, is valued at Rs 139 trillion. “At the upper end, the company is valued at 32 times its 2017-18 earnings and 11 times its 2017-18 book value, market cap is 7.6 per cent of its assets under management. Considering that HDFC AMC is the second largest AMC coupled with huge potential of MF industry growth, strong return ratios, asset light business, higher dividend payout ratio and track record of superior investment performance, we are positive on this IPO,” according to a note by Angel Broking, recommending its clients to subscribe.

HDFC MF is the second IPO from the HDFC group after HDFC Standard Life’s maiden offering in November 2017. It is also the second IPO from a mutual fund house after Reliance Nippon Life Asset Management, which went public in October 2017.