Opportunity for retail stock market investors! HDFC AMC's Issue Of Shares via OFS become available today

HDFC AMC's Issue Of Shares via offer for sale (OFS) has become available for the retail stock market investors. Standard Life Investment, one of the two promoters of HDFC AMC, has offered to sell 60 lakh shares or 2.82 per cent stake through OFS. The floor price for OFS was set at Rs 2,362 each, a 6.92 per cent discount to Tuesday's closing price of Rs 2,537.65 per HDFC AMC stocks.

Speaking on the opportunity for the retail stock market investors in regard to the HDFC AMC issue of shares via OFS; Jaikishan Parmar, Sr. Equity Research Analyst at Angel Broking said, “At the cut off rate of OFS, it is offered at 40x FY2020 EPS, demanding a market cap of Rs.50,735cr, which is 13.7% of the MF AUM (Rs.370,113cr for the month of March 2020). Considering that HDFC AMC is the second largest AMC coupled with huge potential of MF industry growth, strong return ratios, asset light business, higher dividend payout ratio and track record of investment performance, we are positive on this OFS and rate it as SUBSCRIBE.”

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The offer for sale opened for subscription by non-retail investors on Wednesday, with 5.4 million shares put on the block, of which bids were received for 14.1 million. According to data from the stock exchanges, the OFS of HDFC AMC shares by Standard Life Investment was subscribed 2.6 times on Wednesday.

In case of oversubscription, Standard Life has proposed to sell another 60 lakh equity shares of the HDFC AMC. In total, Standard Life plans to sell 1.2 crore shares of HDFC AMC, representing 5.64 per cent of total paid-up capital of the company. As per the base offer, the company has set aside 6 lakh shares for retail investors and 54 lakh shares for the non-retail ones. If oversubscribed, the allocation for each category will double, that is 12 lakh shares for retail investors and 1.08 crore shares of non-retail.

As of 31 March, Standard Life Investments held 26.89 per cent stake in HDFC AMC, while HDFC Ltd owned 52.72 per cent.