State Bank of India (SBI), the country's largest lender, has announced plans to divest a 6.3007% stake in its asset management subsidiary, SBI Funds Management Limited (SBIFML), through an Initial Public Offering (IPO). This strategic move, approved by the Executive Committee of the Central Board (ECCB) of SBI, marks a significant step in the bank's ongoing efforts to unlock value from its subsidiaries.

Key Details of the Planned Divestment

• SBI plans to sell 3,20,60,000 equity shares of SBIFML.
• Amundi India Holding, the other promoter, intends to divest 1,88,30,000 shares (3.7006% stake).
• Total stake expected to be listed: 10.0013% (5,08,90,000 shares).
• The IPO is subject to regulatory approvals.

SBIFML's Market Position

SBIFML has established itself as a leader in India's asset management industry:

• Largest asset management company in India
• Market share of 15.55%
• Manages Quarterly Average Assets Under Management (QAAUM) of ₹11.99 trillion
• Additional ₹16.32 trillion AUM under Alternates

Strategic Implications

SBI Chairman Challa Sreenivasulu Setty highlighted the significance of this move:

• SBIFML would be SBI's third listed subsidiary after SBI Cards and SBI Life Insurance.
• The IPO aims to maximize value for existing stakeholders.
• It may create opportunities for general shareholders and broaden market participation.
• Expected to increase awareness of SBIFML's products among a wider investor base.

Industry Perspective

Valérie Baudson, CEO of Amundi, commented on the partnership's success:

• SBIFML has leveraged SBI's distribution network in India.
• The company has benefited from Amundi's global expertise in asset management.
• The IPO is seen as a way to unlock the value created jointly by SBI and Amundi.
• Both partners plan to continue their long-term collaboration in the Indian market.

Current Ownership Structure

• SBI holds a 61.91% stake in SBIFML.
• Amundi India Holding owns 36.36%.

Historical Context

• SBI Mutual Fund was established in 1987 as the first non-UTI mutual fund in India.
• SBIFML was incorporated in 1992 as a wholly-owned subsidiary of SBI to manage SBI Mutual Funds.

This planned IPO represents a significant development in India's financial sector, potentially setting a new benchmark for asset management companies in the country. As the market leader, SBIFML's potential public listing is likely to attract considerable investor interest and could pave the way for similar moves by other players in the industry.

The Securities and Exchange Board of India (SEBI) has introduced significant changes to the Initial Public Offering (IPO) share-allocation rules, aimed at enhancing institutional participation in the Indian capital markets. These amendments, set to take effect from November 30, mark a substantial shift in the IPO landscape.

Key Changes in IPO Anchor Book Allocation

SEBI has made the following crucial modifications to the IPO anchor book allocation:

Reallocation Mechanism

In cases where the 7% reserved for insurance companies and pension funds remains unsubscribed, SEBI has implemented a reallocation mechanism. This unsubscribed portion will be redirected to mutual funds, ensuring maximum utilization of the anchor book.

Increase in Maximum Number of Anchor Investors

SEBI has also revised the maximum number of anchor investors allowed for IPOs with anchor portions exceeding Rs 250 crore:

Allocation Rules for Smaller IPOs

For IPOs with anchor allocations up to Rs 250 crore, SEBI has set the following guidelines:

• Minimum number of investors: 5
• Maximum number of investors: 15
• Minimum allotment per investor: Rs 5 crore

Merger of Discretionary Allotment Categories

In a move to streamline the allocation process, SEBI has merged Category I and Category II discretionary allotments into a single category for allocations up to Rs 250 crore.

Implications for the Market

These amendments to the ICDR (Issue of Capital and Disclosure Requirements) norms are expected to have far-reaching effects on the Indian IPO market. By increasing the anchor book size and introducing specific allocations for different institutional investors, SEBI aims to:

1. Enhance stability in IPO subscriptions
2. Increase participation from long-term institutional investors
3. Provide more confidence to retail investors

The changes reflect SEBI's ongoing efforts to refine and strengthen the Indian capital markets, making them more attractive to both domestic and international investors.

As these new rules come into effect, companies planning to go public will need to adjust their strategies to align with the revised allocation framework. Market participants will be keenly watching how these changes impact IPO subscriptions and post-listing performance in the coming months.