Mutual fund company HDFC Asset Management Co Ltd made a stellar debut on the stock exchanges on Monday with its shares listing at a 58% premium to the initial public offering (IPO) price and inching higher thereafter.
Shares of HDFC AMC started trading on the BSE at Rs 1,739 compared with the issue price of Rs 1,100 per share. The shares rose to a high of Rs 1,842.95 intraday before closing at Rs 1,815.15, a gain of 65%.
The benchmark Sensex advanced 0.36% on Monday after scaling new highs.
HDFC AMC is the 18th company to list on the main board of the stock exchanges in 2018. Eleven of the previous 17 companies had gained on debut this year.
The spectacular start follows an IPO that saw a huge investor turnout late last month. The IPO was subscribed a little over 83 times with demand across all category of investors.
The company now commands a market capitalisation of Rs 38,479.15 crore crore against the Rs 23,161 crore valuation it had sought through the IPO.
The IPO of the mutual fund company, a joint venture between mortgage lender Housing Development Finance Corp (HDFC) and the UK’s Standard Life Investments Ltd, raised about Rs 2,800 crore ($409 million) at the upper end of the 1,095-1,100 price band.
The IPO is the second ever by an Indian mutual fund company, after Reliance Nippon Life Asset Management Co went public last year. The Rs 1,542-crore share sale of India’s third-largest mutual fund company was subscribed 81 times.
Reliance Nippon Life AMC had a market capitalisation of Rs 16,150 crore.
HDFC AMC had filed its draft prospectus for the IPO on 15 March. It received regulatory nod on 22 June. The offering comprised a sale of 25.45 million shares by HDFC and Standard Life. HDFC sold 8.59 million shares, or a 4.08% stake, while Standard Life sold 16.86 million shares.
The mortgage lender’s stake in HDFC AMC now stands at roughly 53.28% after the IPO from 57.36% earlier. Standard Life’s stake stands at 30.23% from 38.24%. The company will get three years to meet SEBI’s 25% minimum public shareholding norms.
HDFC AMC had appointed a dozen bankers to manage the share sale. These were Kotak Mahindra Capital Co, Axis Capital, Bank of America Merrill Lynch, Citigroup Global Markets (India), CLSA India, HDFC Bank, ICICI Securities, IIFL Holdings, JM Financial, JP Morgan India, Morgan Stanley India and Nomura
Financial Advisory and Securities India.
The company had Rs 3.06 lakh crore worth of assets under management at the end of June, a tad less than ICICI Prudential Asset Management Co. Ltd’s Rs 3.10 lakh crore, according to the Association of Mutual Funds of India.
HDFC AMC’s plan to go public follows a growing trend where banks and financial services are looking to unlock value in group businesses after the rapid rise in stock markets.
The firm is the fourth firm under the Deepak Parekh-led HDFC group to go public.
HDFC got listed in 1978, a year after it began operations, according to its website. HDFC Bank went public in March 1995 with a Rs 50 crore IPO that was subscribed 55 times. Its shares listed at Rs 40 apiece, four times the issue price.
HDFC Standard Life Insurance Co. floated its IPO in November 2017. The Rs 8,695-crore IPO was subscribed a little more than five times and the insurer gained on its trading debut.