SBI Funds Management made a muted stock market debut; stock lists at only 7% premium

Shares of SBI Funds Management made a muted stock market debut on Tuesday, July 21 as the State Bank of India (SBI)'s mutual fund arm was listed at Rs 613.30 on NSE, a premium of 6.85 per cent over its issue price of Rs 574. Similarly, the stock kicked-off its maiden trading session on BSE Ltd with a premium of 6.27 per cent over the given issue price at Rs 610.

As of the listing price, retail investors who received a single lot of 26 equity shares made a profit of Rs 1,021.8 for their investment of Rs 14,924, while HNI investors, getting 14 lots, consisting of 364 equity shares made a profit of Rs 14,305.2 on their investment of Rs 2,08,936. SBI shareholders, who got at least 37 equity shares for a full application made a profit of Rs 1,454.1. 

Listing of SBI Funds Management has been much below the expectations. Ahead of its listing, SBI Funds Management shares were commanding a grey market premium of Rs 100-105 apiece, indicating a possible 17-18 per cent listing gain for investors. The premium remained largely stable through the bidding period, staying in the Rs 90-110 range during the IPO journey.

The SBI Funds Management IPO was open for subscription from July 14 to July 16. It offered shares in a price band of Rs 545-574 apiece with a lot size of 26 shares, and aimed to raise Rs 9,813 crore through the issue. The IPO was entirely an offer-for-sale of up to 17,09,56,631 equity shares by its parent State Bank of India and Amundi.

The issue was subscribed 41.66 times overall and received nearly 63.82 lakh applications. The qualified institutional buyers' portion was subscribed 140.11 times, while the non-institutional investors' quota was subscribed 22.51 times. The retail portion was subscribed 3.6 times, while the employee and shareholder segments were booked 4.65 times and 9.52 times, respectively.

Established in 1992, SBI Funds Management is the largest asset management company in India in terms of assets under management. It is a joint venture between State Bank of India and Amundi, and offers investment products including equity funds, debt funds, hybrid funds, ETFs and portfolio management services.

Brokerage firms were mostly positive on the issue, suggesting to subscribe to it for long-term. Kotak Mahindra Capital, Axis Capital, BofA Securities, HSBC Securities & Capital Markets, ICICI Securities, Jefferies India, JM Financial, Motilal Oswal Investment Advisors and SBI Capital Markets were the lead managers to the issue, while Kfin Technologies was the registrar.