SBI Mutual Funds begins its IPO journey

the world of investment can be slightly vexing for those who are new. understanding company valuations, market trends, future prospects, and more can be a daunting task for the beginner. one solution that has found tremendous success has been the mutual fund route, wherein professional wealth managers handle investments from funds that are pooled in by all those who have bought units in the mutual fund. but of late, they’ve been offering another way to benefit from their collective wisdom: buying their shares off the stock market.

SBI Mutual Funds, India’s largest, is the latest to hop on that trend. SBI has received approval from the executive committee of the central board to divest a 6% stake in the fund house via an IPO.

what’s on offer

SBI MF manages around Rs 5.78 lakh worth of investor assets. it is a joint venture between SBI, which holds a 62.6% stake and French asset manager Amundi, which holds a 36.8% stake. the latter has announced its plans to divest 4% of the overall stake via the IPO. so the size of the offering is expected to correspond to 10% of the valuation of SBI Mutual Funds, which is yet to be set.

as of September, ICICI Bank, Divi’s Labs, Hindalco, and Infosys were among the biggest names in which SBI MF had significant holdings. 

peer performance

this is where things get a little tricky. of the three listed mutual funds on the market at the turn of the year, two have done well since, whereas one was showing negative returns as of December 15. UTI MF has been the best performer of the lot with 87% gains for 2021. Nippon Life MF has gained 17%, whereas HDFC MF is down 17% in 2021. Meanwhile, Aditya Birla Sun Life MF, which was the latest to list on the market (October 2020), is down from its issue price.

this puts pressure on SBI to deliver results on a consistent basis as, unlike in some sectors, its peers appear to be treated on merit by investors. that may not be such a bad thing.

a successful listing would see SBI become only the fifth mutual fund to be listed on Indian bourses, providing scarcity value to those who seek it. if it presses its advantage as the largest, perhaps it can become the most attractive one as well.