SBI Mutual Fund Plans ₹13,000 Crore IPO: DRHP Filing Likely Soon

SBI Fund Management Pvt Ltd., India’s largest asset management company, is reportedly considering filing its draft red herring prospectus (DRHP) for its initial public offering (IPO) by the end of this month. However, the timeline could be pushed back by two to three months if the company initiates a fresh audit process as mentioned in the news reports.

The fund house had earlier targeted the end of February to submit its DRHP, but the schedule slipped following an extensive and detailed audit review.

Target Valuation and Market Comparison

The company is seeking a valuation of around ₹1.3 lakh crore for the proposed listing. Currently, unlisted shares of SBI Mutual Fund are trading at an implied valuation closer to ₹1.5 lakh crore. At the proposed valuation, the IPO would translate into a price-to-earnings (P/E) multiple of roughly 51x, slightly higher than its closest listed peer, ICICI Prudential Asset Management Company, which trades at around 50.4x earnings.

At this valuation, SBI Mutual Fund could launch one of the largest IPOs in India’s financial services sector, with an expected issue size of approximately ₹13,000 crore. The proposed issue would also be about 30% larger than the IPO of ICICI Prudential AMC, its closest rival.

Offer for Sale by Existing Shareholders

The IPO will be entirely an offer for sale (OFS), with both major shareholders planning to reduce their stakes. The majority shareholder, State Bank of India, is expected to sell around 6.3% of its holding, which could generate proceeds of more than ₹8,000 crore.

Meanwhile, French asset manager Amundi is likely to offload shares worth less than ₹5,000 crore as part of the offering.

Merchant Bankers and IPO Costs

SEBI appointed a large group of advisors, with nine merchant bankers involved in the transaction, including Bank of America, Kotak Mahindra Capital Company, and HSBC.

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Despite the scale of the offering, the fund house plans to keep costs relatively modest. SBI Mutual Fund is expected to spend less than ₹75 crore on the IPO process, nearly half the amount spent by ICICI Prudential AMC, which reportedly incurred around ₹150 crore for its public listing.

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