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HomeMarket NewsICICI Pru AMC sees ‘infinite market’ for mutual funds, ramps up alternates business
Nimesh Shah, CEO of ICICI Pru AMC, addresses concerns over SEBI's proposed expense ratio cap, viewing it as a manageable change. He emphasizes that strong performance is crucial to counter the rise of passive funds and competition. Shah highlights the immense growth potential in converting bank depositors to investors and pinpoints the high-margin alternatives business, including commercial real estate and private equity, as a significant future growth engine for the firm.
ICICI Prudential Asset Management Company, India’s largest active fund manager, believes the mutual fund industry is still at the early stages of a long expansion cycle.
With rising financialisation, growing retail participation, and a deep pipeline of alternate assets, the company expects steady compounding over the next decade.
Nimesh Shah, MD & CEO of ICICI Prudential AMC said, “I believe there is an infinite market. From traditional products, even if you look at the bank deposit number, it is ₹230 lakh crores. Why are we getting excited that it has become ₹80 lakh crores today - mutual funds? We are only 1/3 of the banking industry today, and our products are reasonably good for the final investor.”
Ahead of its ₹10,602-crore IPO opening today, MD & CEO Nimesh Shah said the shift from bank deposits to market-linked savings will continue to drive industry growth. He pointed out that mutual fund AUM is still only one-third the size of India’s banking system, leaving large headroom.
The IPO—which runs from December 12 to December 16—is a pure Offer for Sale (OFS) by Prudential Plc, which will reduce its stake by 10%. The issue is priced at ₹2,061–₹2,165 per share, valuing the company at about ₹1.07 lakh crore.
One of the biggest questions for investors is around SEBI’s consultation paper to rationalise the total expense ratio (TER). This could potentially reduce yields and margins.
But, Shah played down the concern. He said the industry has thrived every time regulation pushed for better transparency and lower costs. He also emphasised that discussions with SEBI are ongoing and constructive, and any impact on profitability should be manageable.
With players like Zerodha, Jio BlackRock and others entering the AMC space, competition is intensifying—especially in passive products.
Shah acknowledged the risk but stressed that the foundation of the active fund business remains performance: “Unless we generate alpha, we cannot get money. If we don’t beat the benchmark, people will buy passive. That’s the real risk.”
He highlighted that about 90% of ICICI Pru AMC’s AUM has beaten benchmarks over a three-year period, keeping investor trust intact.
Despite the global shift towards passives, he believes India’s retail market is still under-penetrated, and active funds remain the preferred choice for most investors today.
ICICI Pru AMC is rapidly scaling its alternates business—including PMS, credit funds, and commercial real estate. In the US, alternates form just 10% of AUM but contribute nearly 44% of profitability. Shah expects a similar trend to emerge in India over time.
The company is also awaiting SEBI approval for taking over the private equity business from ICICI Venture, which would give it a ready team and a head start in that segment.
For full interview, watch accompanying video
(Edited by : Unnikrishnan)
