India’s largest asset manager, SBI Mutual Fund, is reportedly preparing to move ahead with its long-anticipated initial public offering (IPO). According to market reports, the company may file its Draft Red Herring Prospectus (DRHP) with the market regulator by the end of the month, although the timeline could extend by two to three months if a new audit review process is initiated.
The fund house had originally planned to submit the DRHP by the end of February. However, the schedule was delayed after the company undertook a comprehensive audit review, which pushed the filing timeline further.
Proposed Valuation and Peer Comparison
The upcoming public issue is expected to value the asset management company at roughly ₹1.3 lakh crore. In the unlisted market, shares of SBI Mutual Fund are reportedly trading at an implied valuation closer to ₹1.5 lakh crore.
At the proposed valuation, the IPO would imply a price-to-earnings (P/E) multiple of about 51 times, which is slightly above the valuation of its listed competitor ICICI Prudential Asset Management Company, currently trading at around 50.4 times earnings.
If launched at this scale, the offering could become one of the largest IPOs in India’s financial services sector, with an estimated issue size of nearly ₹13,000 crore. The deal would also surpass the public listing of ICICI Prudential Asset Management Company by roughly 30% in size.
Offer for Sale Structure
The proposed IPO will consist entirely of an Offer for Sale (OFS), meaning the proceeds will go to existing shareholders rather than the company itself.
The majority stakeholder, State Bank of India, is expected to dilute about 6.3% of its shareholding, which could raise more than ₹8,000 crore through the offering.
Meanwhile, its joint venture partner, the French asset manager Amundi, may sell shares worth less than ₹5,000 crore as part of the transaction.
Advisors and Estimated IPO Costs
To manage the listing process, multiple investment banks have been appointed as advisors. The group of merchant bankers includes institutions such as Bank of America, Kotak Mahindra Capital Company, and HSBC, among others.
Despite the large scale of the proposed issue, the fund house plans to keep the IPO expenses relatively contained. Reports suggest that the company intends to spend less than ₹75 crore on the listing process. This is significantly lower than the approximate ₹150 crore reportedly spent by ICICI Prudential Asset Management Company during its public offering.
Summary
- SBI Mutual Fund is preparing to file its DRHP for a potential ₹13,000 crore IPO.
- The company is targeting a valuation of about ₹1.3 lakh crore.
- The issue will be entirely an Offer for Sale by existing shareholders, including State Bank of India and Amundi.
- The IPO could become one of the largest listings in India’s financial services sector if it proceeds as planned.
- Merchant bankers such as Bank of America, Kotak Mahindra Capital Company, and HSBC are advising on the deal.
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