As savings shift to MFs, fund houses must step up to the challenge

Sunil Banwarilal Singhania-led Abakkus Asset Manager Ltd has filed its IPO draft prospectus with India's securities regulator, SEBI. The primary purpose is to list its equity shares on stock exchanges. As of September, the firm manages assets worth ₹52,609 crore. According to an ICRA report, Abakkus is among the fastest-growing India-focused asset management platforms in terms of quarterly average assets under management (QAAUM), with a CAGR of 18.39 percent between FY24 and FY26.

This marks the second company to enter the IPO market after SBI Funds Management, which raised ₹9,813 crore in July. Canara Robeco AMC, a Canara Bank-owned firm, also successfully listed its shares last year. Nippon India Mutual Fund, formerly Reliance Mutual Fund, was the first to tap the capital markets, raising ₹1,540 crore in 2020.

If Abakkus lists, it would be the 10th AMC to do so. Currently, there are 60 AMCs managing over ₹87 lakh crore in assets under management. MF assets have grown at a CAGR of 18-19 percent since FY21, with monthly SIP inflows hitting a record of ₹32,297 crore in the latest period. The shift in household savings from banks to MFs is significant, with mutual funds now accounting for 13 percent of total household savings, up from 3 percent in 2020.

This growth is driven by digitalization, financial literacy and the popularity of SIPs. The mutual fund industry's success is also reflected in the performance of listed AMCs, with Nippon AMC leading the pack with a 165 percent increase over five years. However, with more players entering the market, the competition among AMCs is intensifying, making innovation and effective marketing crucial for growth. Regulatory changes will also play a key role in shaping the industry.