IPO Note - Aditya Birla Sun Life AMC Ltd By Religare Broking Ltd
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Aditya Birla Sun Life AMC Ltd.
About the Company
Incorporated in 1994, Aditya Birla Sun Life AMC Ltd (ABSL AMC) is currently set up as a joint venture between Aditya Birla Capital Ltd (ABCL) and Sun Life AMC. They are ranked as the largest non-bank affiliated AMC in India by quarterly average assets under management (QAAUM) since March 31, 2018 and among the four largest AMCs in India by QAAUM since September 30, 2011. They managed a total AUM of ₹2,936.42bn under their suite of mutual funds (excluding domestic fund of fund (FoFs)), portfolio management services, offshore and real estate offerings, as of June 30, 2021. Further, they are handling 118 schemes comprising 37 equity schemes (including diversified, tax saving, hybrid and sector schemes), 68 debt schemes (including ultra-short-duration, short-duration and fixed-maturity schemes), 2 liquid schemes, 5 ETFs and 6 domestic FoFs.
They have established a geographically diversified pan-India distribution presence covering 284 locations spread over 27 states and 6 union territories. ABSL AMC distribution network is extensive and multi-channeled with a significant physical as well as digital presence, which includes over 66,000 KYD compliant mutual funds distributors, 240+ national distributors and 100+ banks
Objects of the Issue
* To carry out the Offer for Sale of up to 38,880,000 Equity Shares by the promoters;
* To achieve the benefits of listing on the stock exchanges;
Valuation
Over the past 10 years, Mutual fund assets in India have seen robust growth as the average AUM grew at a CAGR of 16.4 from Rs. 7tn in 2011 to Rs. 33.2tn in 2021. Going forward, the overall industry’s AUM is projected to grow between 11-13% from 2021-2026 and reach Rs. 57tn, largely driven by a pick-up in corporate earnings following stronger economic growth, higher disposable income and investable household surplus, improving technology and expanding internet footprint and better awareness of mutual funds as long-term wealth creators.
ABSL AMC stands to benefit from strong industry prospects as it has a diversified product portfolio and also offers customized solutions to meet financial goals. It has a well-recognized and experienced promoter group (Aditya Birla and Sun Life) which will support in building customer trust as well as improve SIP inflows. Further, the company plans is to improve its customer base as well as gain market share by developing more investment offerings, strengthening relationships with distributors, increasing geographical presence and improving digital platform technology. On the financial front, the company has seen consistent improvement in AUM share and overall performance has been healthy. From the long term perspective, we have a positive view on the company.
Key Risks:
i) High competition from existing and new participants offering investment products.
ii) Any regulatory changes may impact its business.
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