Summary of this article
SBI Funds Management downsizes IPO to Rs 9,812.9 crore.
Pre-IPO placement round raises Rs 1,880 crore from investors.
Reduced public share pool increases competition for IPO allotment.
SBI Funds Management announced on July 12 that it has reduced the offer size for its anticipated initial public offering (IPO). The asset management company (AMC) has revised its total issue size to Rs 9,812.9 crore reducing it from Rs 11,692.9 crore.
Consequently, the total equity shares on offer for subscription have also decreased from 203.7 million to 170.9 million. The reduction in offer size is expected to impact investors who are gearing up to participate in the company’s public issue.
Why Did SBI Funds Management Reduce Its Issue Size
The reduction in offer size follows a successful pre-IPO funding round. In a funding round held on July 11, the company allotted shares to institutional investors. Promoters of SBI Funds Management, State Bank of India and Amundi India Holding sold a combined 1.6 per cent stake to domestic and international investors.
The two promoters sold an aggregate of 32.7 million equity shares to 30 institutional investors. Notably, the share sale was conducted at the upper end of the price band of Rs 574 per share.
State Bank of India sold 28.8 million shares to raise Rs 1,655 crore, while Amundi India Holding offloaded 3.91 million shares for Rs 225 crore. The private placement round saw participation from institutional heavyweights like WhiteOak Capital, Tata AIG, Malabar India Fund, 360 ONE, and Carnelian. Following the transaction, State Bank of India holds a 60.32 per cent stake, whereas Amundi retains 36.06 per cent ownership.
How Does This Affect IPO Applicants
For retail and institutional applicants, the downsized issue size means a tighter supply of shares to bid for. As the public pool has shrunk by 32.8 million equity shares, investors are likely to have a harder time securing successful allotment.
Investors must note that the entire public offering is structured purely as an offer for sale. All net proceeds will go directly to the selling promoters instead of the company, meaning the asset management company will not receive any fresh capital from this transaction.
SBI Funds Management IPO: Key Dates
The anchor investor round is set to open today on July 13. On the other hand, the subscription window for bidding is set to open on July 14 and will close on July 16. The basis of allotment will be finalised on July 17. Refunds will be initiated and shares credited to demat accounts on July 20. The equity shares will begin trading on both the National Stock Exchange and Bombay Stock Exchange on July 21.
SBI Funds Management IPO: Key Details
SBI Funds Management IPO’s price band has been fixed at Rs 545 to Rs 574 per share. Retail investors must bid for a minimum lot size of 26 shares, requiring a minimum application of Rs 14,924 at the upper end of the price band.
Qualified institutional buyers are allocated 50 per cent of the net offer, while non institutional investors have a 15 per cent reservation. The remaining 35 per cent is reserved for retail individual investors.
Additionally, a dedicated quota of 2.7 lakh shares is reserved for eligible fund house employees, alongside 29.87 lakh shares for the employees of the parent company, State Bank of India.
Those qualifying under employee reservations will receive a discount of Rs 54 per share against the final discovered offer price. The SBI Funds Management IPO has reserved 13.05 million equity shares specifically for eligible shareholders of the State Bank of India (SBI).
