HDFC AMC Gets Board Approval For IPO

HDFC Asset Management Company Ltd., the joint subsidiary of HDFC Ltd. and Standard Life Investments Ltd., today received board approval to sell shares through an initial public offering.

“We believe that the listing would unlock value of the business for the shareholders and provide investors an opportunity to participate in the emerging asset management space within our group,” said Deepak Parekh, chairman of HDFC AMC, in a media statement.

HDFC and Standard Life too have given an in-principle approval to offering shares to the public in one or more tranches, the statement said.

Shares will be offloaded through an offer for sale and there will be no fresh equity issuance. Following the dilution, HDFC's stake in the subsidiary will come down to at least 50 percent from the existing 57.36 percent. For Standard Life, the stake will be pared to 24.9 percent, the statement added.

The company wants to “effectively achieve” 25 percent stake dilution over three years, Managing Director of HDFC AMC, Milind Barve told BloombergQuint in an interaction. “Over the course of the next couple of months, the board will finalise how much will be diluted in the first tranche,” he added.

HDFC AMC has over 2.69 lakh crore of assets under management. It had a net profit of Rs 550 crore, and a net worth of Rs 1,417 crore as of March-end, according to a regulatory filing.

HDFC and its subsidiary will also enter into a collaboration agreement with Standard Life Aberdeen Plc to work on developing new products for the Indian market. "The improving penetration levels of mutual fund products provide an interesting opportunity to channelize investments more productively,” said Milind Barve, Managing Director of HDFC AMC, in the statement.

The IPO will be subject to corporate, regulatory and other approvals.

The HDFC group's philosophy has always been to list a business when it has grown to certain size, Barve said, adding that the AMC business over its 17 years of operations has reached maturity. “It is a healthy thing for an asset manager to be listed, as it allows for more transparency and disclosures.”

Watch the full interview here.