'Huge growth potential for mutual fund industry in India'

PTI | | Updated on: Jul 19, 2018

The country’s mutual fund industry has a huge growth potential as Indian households’ savings amount to Rs 20-30 lakh crore, top official of an asset management company said today.

“We are already witnessing a gradual shift in household savings as dominance of physical savings (real estate and gold) is going down, while share of financial savings is growing,” HDFC AMC Managing Director Milind Barve told reporters here while launching the company’s initial public offer.

Barve highlighted the fact that India lags most major nations of the world in terms of assets under management (AUM) of mutual funds as a percentage of gross domestic product (GDP).

In India, asset base of mutual funds as a percentage of GDP is just 11 per cent, while the world average is 62 per cent.

“When it comes to the share of MFs in the market capitalisation, it is less than 5 per cent in India, which only proves the huge market potential,” he said. “India has a very saving culture as Indians save Rs 20-30 lakh crore every year, which indicates immense scope for channelising this saving into MF industry,” he added.

The country has 42 mutual fund houses managing assets to the tune of over Rs 23 lakh crore. Speaking about the upcoming IPO, Barve said HDFC Asset Management Company (AMC) will launch its Rs 2,800 crore initial share-sale on July 25. The price band has been fixed at Rs 1,095-1,100 per share.

The proposed IPO offers up to 2.54 crore equity shares of the fund house through an offer for sale of 85.92 lakh shares (4.08 per cent stake) by HDFC and up to 1.68 crore shares (7.95 per cent holding) by Standard Life. HDFC AMC operates as a joint venture between Housing Development Finance Corporation (HDFC) and Standard Life Investments.

The fund house, which has a total AUM of over Rs 3 lakh crore at the end of March, is the country’s second largest fund house after ICICI Prudential AMC that has an asset base of Rs 3.06 lakh crore. It will become the second AMC to hit the markets after Reliance Nippon Life AMC, which had raised Rs 1,542 crore last year.

Published on July 19, 2018
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