SBI Funds Management IPO opens on Tuesday; GMP signals 17% listing premium

The ₹9,795-crore initial public offering (IPO) of SBI Funds Management Ltd., India's largest asset management company, will open for subscription on Tuesday, July 14. The public issue will remain open until July 16.

Ahead of the issue launch, the IPO has been commanding a healthy premium in the unofficial market. According to market participants, the grey market premium (GMP) stood at ₹99 per share, implying a potential listing gain of about 17.25% over the upper end of the price band.

However, investors should note that the grey market premium is only an unofficial indicator of market sentiment and can change significantly before listing.

The company has fixed a price band of ₹545-574 per share, with a face value of ₹1. Retail investors will need to invest at least ₹14,924 to apply for one lot of 26 shares at the upper end of the price band.

The IPO is a pure Offer for Sale (OFS) comprising 20.37 crore equity shares, with no fresh issue. As a result, SBI Funds Management will not receive any proceeds from the issue, with the entire amount going to the existing shareholders selling their stake.

Before the IPO, the company completed a pre-IPO placement worth about ₹1,656 crore.

According to a filing by State Bank of India on July 9, SBI Funds Management allotted 2.88 crore equity shares to investors at ₹574 per share through a private placement. Investors participating in the round included 3P India Equity Fund I, Tata AIG General Insurance, Dymon Asia Multi-Strategy Investment (Singapore) and Bennett Coleman & Co. Ltd.

Following the pre-IPO placement, the company's paid-up equity share capital increased to 17.49 crore shares from 14.60 crore shares earlier.

Half of the issue has been reserved for Qualified Institutional Buyers (QIBs), while 35% has been earmarked for retail investors. Small HNIs have been allocated 5% of the issue, with the remaining 10% reserved for big HNIs.

The anchor investor portion opened on July 13, while the basis of allotment is expected to be finalised on July 17. Shares are likely to debut on the stock exchanges on July 21.

SBI Funds Management is India's largest mutual fund house, managing ₹12.5 lakh crore in mutual fund assets and commanding a 15.3% market share. It is a joint venture between State Bank of India and Amundi, Europe's largest asset manager.

The listing will be the third IPO by an SBI subsidiary, after SBI Life Insurance and SBI Cards & Payment Services.