The share allotment of Aditya Birla Sun Life AMC’s initial public offering is likely to be on Wednesday and was subscribed 5.25 times by the end of the offer’s closing day last week on Friday.
The issue was subscribed 56% on Wednesday, the first day of the subscription. A day earlier, the asset manager had allotted shares worth Rs 789 crore to anchor investors at Rs 712 apiece. The AMC is aiming to raise Rs 2,768 crore through this offer, and the valuation works out to Rs 20,500 crore.
What you need to know
The AMC is the investment manager of Aditya Birla Sun Life Mutual Fund, and is a joint venture between Aditya Birla Group and Sun Life Financial Inc of Canada. The company is one of the largest non-bank affiliated AMCs in the country.
The price band for IPO is Rs 695 to Rs 712 per share.
The domestic partner is selling 2.85 million shares – less than 1% of its stake – to raise about Rs 203 crore.
The IPO is entirely an offer for sale, where promoters Aditya Birla Capital and Sun Life (India) AMC Investments will sell some of their stake in the fund house.
Aditya Birla Capital will sell 28.51 lakh equity shares as part of the OFS, while Sun Life (India) will sell up to 3.6 crore shares.
What the grey market is saying
The IPO’s offer size has been reduced to 2.77 crore equity from 3.88 crore shares after it raised Rs 789 crore from 50 anchor investors on September 28. Overall, the offer witnessed a moderate response from the investors.
According to reports, shares of Aditya Birla AMC today is Rs 3 in the grey market, Rs 17 lower from yesterday’s grey market price. The fall in the price ahead of share allotment process indicates that ‘par listing’ of the public issue is expected, on October 11.
Market participants have said that that grey market price has nosedived from Rs 70 to Rs 3 in a week due to the tepid response by investors.
According to the grey market, the public issue failed to get a strong response from bidders because a 100% offer for sale was not cheered among street investors.
What brokerages are recommending
Experts have maintained that the financials of the company matter the most in success or failure of a public issue, and not grey market numbers as the worrying fall of the premium in grey market price may keep investors at bay on a listing day.
Most brokerages maintained a ‘subscribe’ rating on the IPO.
According to brokerage Anand Rathi, the AMC’s customer base, diversified distribution network, long-term record of innovation and use of technology are among the company’s key strengths.
Furthermore, the company’s strategies of strengthening relationships with distributors, employee value proposition, among others are key factors for a strong listing, brokerages said.