ICICI-Prudential AMC IPO listing to be held on December 19: Subscribed 39.17 times in 3 days; Interview of company’s investment strategy head Chintan

How has been the journey since the beginning of the company till now and what are your future plans?

The company was started about 36 years ago. It is a joint venture between ICICI Bank and Prudential Corporation and is one of the first private sector mutual funds in India. Initially, mutual funds were a new investment for investors and were quite small in terms of overall savings. However, in the last 10 years, mutual fund investment has become a very important means of financial savings.

10 years ago, mutual funds had 13% share in bank deposits, which has increased to 28% today. Now with the growth of India’s economy, deposits are also increasing and the share of mutual funds is also increasing. Our company has also achieved good growth in the last 32 years. As we built core investment management capabilities, we grew from small to big and the types of funds we offered also increased.

Today, we have the largest stake in equity and mutual funds in India. Apart from this, our company is the highest profitable company in India today. We are also the first company in the industry to achieve more than 20% operating profit. Our company has grown by focusing on investment. In future also we will remain connected with the growth of India and will keep moving forward.

Chintan Haria, Principal Investment Strategy, ICICI Prudential Asset Management Company.

What will be the promoters’ stake in the company after IPO?

The company has two shareholders – ICICI Bank Limited and Prudential Corporation Holdings Limited. Of these two, ICICI Bank is not selling any of its stake in the IPO. The bank has purchased 2% stake from Prudential Corp some time ago. Whereas Prudential Corporation is selling about 10% of its stake in the issue.

The company further has to increase its public holding to 25% in the next 5 years as per SEBI rules. Prudential Corporation has invested in the company for more than 25 years, hence it has decided to sell its stake. After the issue, the promoters’ stake in the company will reduce from 100% to around 90%.

IPO is completely OFS, so how will the company generate capital after listing?

IPO is completely OFS, because the asset management company does not require capital to grow. For the last several years, we were giving 80% of the profit that the company was making as dividend to the promoters and investors. Now whatever profit we make, we will give 60% of it to the shareholders as dividend.

What benefits can investors get after IPO?

Investors generally invest in equity for the long term only. If the company grows, its shares also grow and with it the investment of investors also increases. Apart from that, we will give 60% of whatever profit the company makes to the shareholders as dividend.

Apart from this, our company is associated with the growth of India. If investors also want to be associated with India’s growth, then this is a very good opportunity. If we continue to manage as we have been managing so far, investors will benefit from it.

How much competition is coming from new mutual fund platforms?

We have seen that wherever there is growth in the market, new players come there. As new players come, the industry grows. We believe that competition does not increase with the entry of new players, rather the market price is increasing. Due to increase in market price, new investors join.

In such a situation, our pass becomes an opportunity to add these new investors. For us, competition is an increased opportunity. We do not consider it as competition. We consider it as market creation. In such a situation our growth can be better.

What is the strategy behind launching 65 new fund offers in the last five years?

For us NFO is an investment strategy. If you see, 65 NFOs have come in the last five years, mostly index funds and ETFs. Apart from this, flexi funds have also come.

Our policy is to offer good products and schemes to investors in the long term. For example, investors have got good benefits in silver and gold ETFs. We are trying to cover all such sector schemes.

What percentage of total equity AUM comes from ICICI Bank customers?

9% of the total equity AUM comes from ICICI Bank customers, the remaining 91% comes from others. Apart from this, our distribution in India has increased significantly.

What is the advice for long-term investors to hold the stock after listing?

We believe that investors should invest thinking for the long term only. One should invest for at least 3 to 5 years, be it IPO, shares or any mutual fund.

Now we are telling you the details related to this issue…

IPO listing will take place on December 19

The IPO listing of ICICI Prudential Asset Management Company (AMC) is scheduled to take place on December 19. The company’s Rs 10,600 crore IPO was opened for public subscription on December 12 and closed on December 16. The company’s IPO has received a total of 39.17 times subscription in three days. Whereas in the retail category it has been subscribed 2.53 times.

Its price band has been fixed at Rs 2,061 to Rs 2,165. This entire issue is an offer for sale, that is, the company is not issuing any new shares. Its current joint venture partner, British company Prudential Corporation Holdings, is selling its 4.89 crore shares. Before the opening of the IPO, the company has raised Rs 3,022 crore from 149 anchor investors. The company is selling 9.9% of its stake through the issue.

Raised Rs 4,815 crore in pre-IPO round

The company, which has 13.3% share in the asset management market alone, raised Rs 4,815 crore in the first round (pre-IPO). In this pre-round, the company issued 2,22,40,841 equity shares through private placement at Rs 2,165 per share. 26 marquee investors including Prashant Jain, Jhunjhunwala Family, Manish Chokani, Madhusudan Kela participated in the pre-IPO round of ICICI Prudential Asset Management Company.

Marquee investors have put in around Rs 4,815 crore in the pre-IPO round. Big names like Lunet Capital Rakesh Jhunjhunwala’s Estate, The Regents of the University of California-IIFL Asset Management, Serv Investments, 3P India Equity Fund, PI Opportunities Fund-II, 360One Funds, DSP India Fund, Whiteoak Capital India Opportunities Fund, HCL Capital, Manish Chokani and Madhusudan Kela participated in it.

ICICI Bank bought 2% stake

Insurance companies also participated in the pre-IPO round. These include SBI Life, HDFC Life, Kotak Life Insurance, Aditya Birla Sun Life Insurance, Bajaj Life Insurance, Tata AIG General Insurance and Go Digit General Insurance.

Additionally, Kedar Capital Public Markets Fund, TIMF Holdings, Malabar India Fund and Clarus Capital joined. At the same time, ICICI Bank had bought an additional 2% stake in the company by investing Rs 2,140 crore.

10% share reserved for retail investors

50% of the company’s issue was reserved for Qualified Institutional Buyers (QIB). Apart from this, 35% share was reserved for retail investors and 15% share was reserved for non-institutional investors (NII).

The company was started in 1993. ICICI Prudential Asset Management Company was started in 1993. The company offers a total of 143 investment schemes. It has Assets Under Management (AUM) worth Rs 10.87 lakh crore.

What is IPO?

When a company issues its shares to the general public for the first time, it is called Initial Public Offering i.e. IPO. The company needs money to expand its business. In such a situation, instead of taking loan from the market, the company raises money by selling some shares to the public or issuing new shares. For this the company brings IPO.