Global insurance and asset management giant Prudential Plc said on Wednesday it is evaluating a potential listing of its Indian joint venture, ICICI Prudential Asset Management Company Ltd. The listing will involve the partial divestment of its shares, and is subject to market conditions, requisite approvals and other considerations, it added.
“India is a strategically important market for Prudential, with compelling growth prospects. We will continue to explore opportunities to grow our businesses in the market,” a statement by Prudential Plc read. The company also noted that once the divestment is complete, the net proceeds will be returned to shareholders. “We will provide a further update at an appropriate time,” it added.
Stars of the bull run
Asset management companies were investor favourites during the bull run, but the recent market correction has flipped the script. Volatility causes investors to become jittery, leading to redemptions or shifts between schemes. Given their deep ties to capital markets, AMCs are influenced by operating leverage, mark-to-market (MTM) swings and AUM fluctuations. While the long-term outlook remains strong, with the financialisation of savings expected to drive growth over the next decade, the near-term performance of these stocks will continue to ebb and flow with market sentiment.
S Naren, chief investment officer at ICICI Prudential AMC recently warned investors not to put money in small-cap and mid-cap funds via systematic investment plans (SIPs) in the current market, saying these sectors were grossly overvalued. Speaking at a mutual fund distributors’ event, Naren cautioned that risks in the financial system have shifted from banks to SIP investors.
ICICI Bank to retain majority stake
ICICI Prudential AMC Ltd is a strategic joint venture between ICICI Bank, which holds a 51% stake, and London-headquartered Prudential Plc, which holds 49%. ICICI Bank said in a regulatory filing on Wednesday that it intends to retain its majority shareholding in ICICI Prudential Asset Management Company.
Kranthi Bathini, director of equity strategy at WealthMills Securities, noted that ICICI Bank has a record of listing its subsidiaries, including ICICI Securities, ICICI Lombard General Insurance Company, and ICICI Prudential Life Insurance Company. So, while this move comes from Prudential Plc, it is hardly a surprise given ICICI Bank’s history, he said.
ICICI Prudential AMC is India’s second-largest asset manager by assets under management (AUM). It manages assets worth ₹8.67 trillion and had 1.26 crore customers at the end of December. It also offers portfolio management services to Indian investors, and international advisory mandates to global clients across asset classes such as debt, equity and real estate. The company was launched in 1998 with only six employees across two locations. It now has 3,888 employees across 297 locations (as of 30 September 2024).