SBI board approves mutual fund IPO move

State Bank of India said its central board has approved a proposal to potentially sell around 6% of its stake in its mutual fund arm via an initial public offering.

“..the Executive Committee of Central Board of the Bank has accorded approval for exploring possibilities to offload 6% stake of the Bank in SBI Funds Management Private Limited through IPO route,” India’s largest bank said, without giving any other details.

SBI’s fund management business, branded as ‘SBI Mutual Fund’ is a joint venture of the bank with French asset management company Amundi.

SBI owns close to 63% of the fund management business, with Amundi Asset Management owning the rest.

There have been several media reports in recent months about a ‘$1 billion’ IPO for the mutual fund unit.

Quoting unnamed capital market sources, the reports have pointed out that SBI has approached merchant bankers seeking a valuation for its mutual fund unit.

Merchant banks have reportedly pointed to a valuation of around $7 bn, and suggested that the IPO could involve shares worth $1 billion.

If the business is valued at $7 bn, SBI’s decision to sell a 6% block in the company via the IPO could fetch it around $420 mn, or about Rs 3,200 cr.

The remaining money raised in the IPO will flow to SBI Mutual Fund and possibly to Amundi Asset Management.