Country’s first-ever mutual fund IPO by Reliance Nippon Asset Management Company (AMC) was lapped up by investors. The 43-million share offering saw 81 times more demand, with bids for 3,485 million shares, worth Rs 87,830 crore. The Rs 1,540-crore offering saw healthy demand in all three investor categories. The institutional portion of the IPO was subscribed 118 times, high net worth individual (HNI) segment was subscribed 209 times and retail investor portion was subscribed five times. The retail book was kept open till late as demand remained high, said investment bankers. The IPO saw over 1.5 million applications, one of the highest for IPOs this year.
The price band for the IPO was Rs 247 to 252 per share. At the top-end of the price band, Reliance Nippon AMC was valued at Rs 15,422 crore.
Japan’s Nippon Life and Anil Ambani-led Reliance Capital sold shares worth up to Rs 643 crore and Rs 282 crore respectively in the IPO. The AMC also issued fresh shares worth Rs 617 crore.
The company is the country’s third-largest AMC in terms of assets and has a 11.4% market share. At the end of August, Reliance Nippon AMC managed assets worth Rs 3.84 lakh crore across mutual funds (Rs 2.3 lakh crore), managed accounts (Rs 1.53 lakh crore) and offshore funds & advisory mandates (Rs 2,223 crore).
At the Rs 252 per share, Reliance Nippon AMC was valued at 37 times its FY2017 earnings and eight times its FY2017 pre-IPO book value.
“Considering Reliance Nippon AMC is the third largest AMC coupled with huge potential of MF industry to grow, strong return ratios, asset light business, higher dividend payout ratio and track record of superior investment performance, we are positive on this IPO,” Angel Broking had said in a note to its clients.
“We like Reliance Nippon AMC as it is the largest AMC with highly diversified product offerings and strong distribution reach,” said another note by Motilal Oswal.