Reliance Nippon Life AMC IPO subscribed 81 times; sees good institutional demand

NEW DELHI: The Rs 1,540-crore initial public offering (IPO) by Reliance Nippon Life Asset Management (RNAM), which got fully subscribed on the first day itself, continued to see huge investor response on the last day of the bidding process on Friday.

By 5 pm, the issue was subscribed 81.28 times, as investors bade for 3,48,23,88,919 shares compared with 4,28,40,000 shares on the block. Retail individual investor (RII) quota was subscribed around 5.16 times, qualified institutional buyer (QIB) 118.41 times and non-institutional individual investor (NII) 209.44 times.

"We believe (the IPO) is fairly priced, but given the liquidity in the markets and company’s performance in the recent past, we recommend to Subscribe for long term gains," Prabhudas Lilladher said in a note.


At the upper end of the price band, it is offered at 37 times its FY2017 EPS and eight times its FY2017 book value (Pre-IPO), demanding Rs 15,442 crore in market cap, which is 6.8 per cent of Rs 2,28,329 crore assets the company managed as of August 31.

"In the past we have seen that any first time listing in a niche segment attracts considerable investor’s interest. RNAM being the first AMC to come with an IPO may attract similar interest. On the back of robust AUM, healthy return ratios and leading market share, investors may be suggested to subscribe to the issue from a long term perspective," Centrum Broking said in a note.

Brokerage firm Motilal Oswal said, “We like Reliance Nippon Life Asset Management as it is the largest AMC with highly diversified product offerings and strong distribution reach. The company’s AUM has grown at CAGR of 22 per cent in FY13-17 and has delivered strong revenue/EBITDA/PAT over the same period."

Angel Broking is positive on the issue given the company’s leadership position, well managed investment book, robust balance sheet and reasonable valuations.