Aditya Birla Sun Life AMC IPO: Information Analysis

Aditya Birla Sun Life AMC (ABSL AMC) is a joint venture incorporated in 1994 between Aditya Birla Capital (51 per cent stake) and Sun Life (India) AMC Investments Inc. (49 per cent). ABSL AMC has been the largest non-bank affiliated AMC in India by quarterly average assets under management (QAAUM) since 2018 and among the four largest asset management companies (AMC) in India by QAAUM since 2011. Its primary revenue source is the fee that it charges for managing investment assets. The average assets under management (AUM) of the mutual fund industry grew at a CAGR of 16.4 per cent to Rs 33.18 trillion in June 2021 from Rs 7.01 trillion in March 2011. The company is currently managing a total AUM of Rs 2,93,642 crore across mutual funds (excluding domestic fund of funds), portfolio management services, offshore and real-estate offerings. It operates 118 schemes, comprising 37 equity schemes, 68 debt schemes, two liquid schemes, five ETFs and six domestic FoFs as of June 2021. ABSL AMC is present in 284 locations spread over 27 states and six union territories. Of them, 143 branches are located in B-30 cities (beyond the top 30 cities). Further, 13 of the company's top open-end schemes, accounting for 64.4 per cent of its QAAUM, have outperformed their peers in a 10-year annualised return horizon as on June 30, 2021. ABSL AMC increased its equity mix by 14.4 percentage points from March 2016 to June 2021 (its monthly average AUM grew at 25.8 per cent CAGR) in a bid to enhance its profitability, as equity-oriented schemes have higher management fees relative to other schemes. Strengths Large size: With a total AUM of Rs 2,93,642 crore, ABSL AMC has a market share of 8.3 per cent and is the fourth-largest player in terms of assets under management (after SBI AMC, HDFC AMC and ICICI Prudential AMC). Given that this business has an extremely high amount of operating leverage (fixed costs constitute a high proportion of overall costs), any future growth in revenue is expected to result in a disproportionately large growth rate on its bottom line. Large distribution network: The company has a strong distribution network with over 66,000 KYD-compliant mutual fund distributors, over 240 national distributors and over 100 banks/financial intermediaries as on June 30, 2021. Moreover, the hub and spoke model employed by the company enables it to leverage its extensive branch and emerging market-representatives network and keep distribution costs low at the same time. The company's share of monthly average AUM (MAAUM) from B-30 cities in June 2021 was the second-highest among the five largest AM