SBI prepares mutual fund venture for IPO

The lender could raise about $1 billion from the offering

State Bank of India, the country's largest lender, is preparing for its mutual fund joint venture for an initial public offering, according to people familiar with the matter.

SBI plans to ask investment banks for proposals after discussions with its board and shareholder Amundi Asset Management and kick off the process in the next few months, the people said. The lender could raise about $1 billion from the offering, one of the people said, who asked not to be identified as the information is private. SBI's mutual fund is currently valued at about $7 billion, another person said. At $1 billion, the first-time share sale could be India's biggest since the $1.4 billion listing by SBI Cards & Payment Services Ltd. in March, according to data compiled by Bloomberg. The SBI mutual fund business would also be the third such listing of its kind in the country, joining UTI Asset Management Co and HDFC Asset Management Co

Shares in SBI pared losses in Mumbai after the Bloomberg News story, ending the day 4.2 per cent lower as the broader banking gauge was down 4.9 per cent. SBI's plans to list the mutual fund arm is part of its strategy to extract more value from its units after divesting some of its stakes in its life insurance and cards businesses last year.

SBI's mutual fund is the largest in India with 5 trillion rupees ($68.4 billion) of assets under management, according to its website. The fund house posted a net income of 4.98 billion rupees for the April-December period, according to an investor presentation. SBI holds a 63 per cent stake in the mutual fund business, while Paris-based Amundi owns the rest. Deliberations are at an early stage and details of the share sale could still change, the people said. A representative for SBI didn't immediately respond to requests for comment. (Bloomberg)

Baiju Kalesh, Suvashree Ghosh