HDFC AMC OFS comprise sale of Shares by Standard Life Investments Ltd, one of the promoters of HDFC which has proposed to sell up to 47.5 lakh equity shares, representing 2.23 per cent of the total issued and paid-up equity share capital of HDFC AMC through OFS. Further there is option to additionally sell up to 38.5 lakh equity shares, amounting to 1 .81 per cent stake of HDFC AMC. The OFS shall happen on the BSE and NSE on December 4 for institutional investors and December 5 for retail investors.The floor price for the sale has been set at Rs 3,170 per equity share. The total offer size at the floor price is Rs. 2726 crore.
- HDFC AMC OFS: settles for only 3.1% stake sale. Green shoe option not exercised fully. Cut off at Rs. 3175
- Retail . Min price or cut off price is Rs. 3175
- HDFC AMC OFS, Day 2 end. Looks like those who bid at cut off or 3175, will get partial but substantial allotment. Everyone else above Rs. 3175 should get full allotment. 1.34x retail response.
About HDFC AMC OFS
Issue Period 04-12: 05-12-2019
Face Value Rs. 10
Floor Price Rs. 3,170
MP a Day before Rs. 3441
% Discount of Floor Price 8.55%
Base Offer (shares) 47,50,000
Base offer Non Retail 4275000
Base offer Retail 950000
Base Offer in Rs. Crore 1,506
Tot offer (shares) with Green Shoe 86,00,000
Total Offer (Rs. crore) 2,726
Total Non retail Shares 77,40,000
Total retail shares 8,60,000
Total retail in Rs. Cr. 273
About HDFC AMC
- Incorporated in 1999, HDFC Asset Management Company (HDFC AMC) Limited is well-known fund house engaged in providing savings and investment products.
- HDFC Asset Management Company Ltd. (HDFC AMC) is one of the largest asset management companies.
- HDFC AMC total asset under management (AUM) stood at Rs. 3,662 billion as on 30th September 2019.
- Company is a joint venture between Housing Development Finance Corporation (HDFC) and Standard Life Investments (SLI).
- In July 2018, HDFC AMC came out with an IPO that evoked strong response.
HDFC AMC OFS : Salient points and Assessment
- HDFC AMC OFS is being taken due to regulatory requirements to achieve the minimum public shareholding in the company as per SEBI rules.
- Promoters currently own 82.7% stake in the company, which will come to around 80% after the OFS. Further 1 or more OFS can be expected in due course.
- Company is virtually debt free.
- HDFC AMC 3 Years ROE stands at 37.88%
- HDFC AMC dividend is healthy at 48.09%
- Stock is quite expensive but also fancied trading at 21.45 times its book value
- HDFC AMC enjoys premium valuation. due to a strong positioning, superior earnings and reputation of the group.
- HDFC AMC was included in the MSCI in Nov 19 leading to a further jump to the stock price.
- HDFC AMC shares have more than doubled in the year.
- HDFC Asset Management Company (AMC) reported a 79% jump in profit after tax at Rs 368.3 crore in Q2FY19 (yoy). Its total income rose by 7% to Rs 549 crore in July-September quarter of the ongoing fiscal from Rs 515.3 crore in the same period last fiscal.
- Consistent investment performance over the years has helped HDFC AMC establish itself as one of the leading AMC in the country
- HDFC is a highly fancied stock and valuations on fundamental would always appear to be on the higher side. Though a reasonable opportunity there is an element of risk which stems more from movement of broader markets. I intend to participate in the HDFC AMC OFS
- International events like President Trump’s announcement that he wants to wait till the end of US elections in Nov 2020 for trade deal with China could affect World markets as well as Indian Markets.
Standard disclaimer: I am not a SEBI registered analyst. I may have vested interest in every stock I discuss. Please do your own due diligence as stock market investments have high degree of inherent risk.