At Rs 10,602 crore, the ICICI Prudential Asset Management Company IPO ranks among the largest public offerings in recent times. What sets it apart, however, is its reasonable pricing—a rare quality in today’s overheated IPO market. Post-listing, the company is expected to command a market capitalization comparable to HDFC AMC.
The ICICI Prudential AMC IPO merits a subscription, and the stock deserves a place in your long-term portfolio. Here’s why we think so.
Issue details
The ICICI Prudential AMC (ICICI Pru AMC) IPO is entirely an offer-for-sale, with promoter Prudential Corporation Limited offloading 4.89 crore shares (about 10% of the shareholding). Prudential currently holds 49% in ICICI Pru AMC, which will drop to 39% post-IPO; the IPO RHP also indicates that Prudential will continue to reduce stake over time in order to bring the minimum public shareholding to the stipulated 25%. The other promoter, ICICI Bank, holds 51% in the AMC and will continue to do so. The IPO price band is set at Rs 2,061-Rs 2,165 with a minimum lot size of 6 shares. The issue opens on December 12th and closes on December 16th.
Why subscribe
ICICI Pru AMC is a market leader in the mutual fund space, with a strong presence across categories, steady growth in AUM, and a diversified presence. It sports superior ROEs and stable, high margins. But most importantly, the IPO is priced very reasonably, a rarity in the current IPO flood.
#1 Market leadership in mutual funds
AMCs earn revenue from the management fee (via the expense ratio), making AUM acquisition the key revenue driver. Scaling AUM does not require capital infusion, making AUM growth directly translate into revenue and earnings growth.
In the mutual fund industry, ICICI Pru AMC is the second largest with a 13.2% share of the AUM (as of September 2025, based on quarterly average AUM). This is above HDFC AMC’s 11.4%. The past few years have seen a burst of new AMCs entering the space and existing AMCs clocking strong as well. The share of the top 10 AMCs dropped from 80% in December 2022 to 76.4% by September 2025.
However, ICICI Pru AMC held on to its spot and even eked out a small increase in market share from 12% to 13.2% in this period. It has narrowed the gap between itself and market leader SBI AMC. Of the top 10 AMCs, only Nippon India was the other one to increase market share. The loss of share in the top 10 was primarily seen by leader SBI AMC which dropped from 17.7% to 15.5% in AUM share. Other steep dips were seen by Aditya Birla Sun Life AMC and UTI AMC (both of which are listed), as well as Axis AMC.
ICICI Pru AMC’s strong presence across MF categories has played a big role in this defence:
- One, it has several flagship funds in equity, debt, and hybrid and in all categories under each. This wide presence means it can meet a variety of investor requirements. The AMC is also adept at identifying market gaps to launch differentiated funds and timely opportunities for new NFOs. For example, it was among the first to have the current ‘balanced advantage’ concept, or the ‘opportunities’ concept.
- Two, its funds are also often in the top quartile of performers in multiple categories, further helping grow and retain AUM (and we can attest to that, given that ICICI funds often feature in our Prime Funds!).
- Third, it has a large distributor network to push its funds. It does not rely excessively on the ICICI Bank network. RHP data shows that MF distributors, including national distributors, accounted for the lion’s share of equity-oriented AUM at 53%. ICICI Bank accounts for just 8.5%. The share of direct plans is at about 27%, indicating that the distributor network is still strongly driving AUM acquisition.
- Fourth, it made good inroads in the passive space through both index funds and ETFs, and in both equity and debt. Trading data indicates that several of its ETFs have strong volumes and low tracking error, which in turn encourage investor interest. This focus on passive products has helped it effectively tap the surging investor interest in passive funds over the past few years. Data from the RHP indicates that individual investor share in ETF AUM has moved from 6.3% in FY20 to 11.1% now; this is among the biggest shifts. In the passive effort and in ETFs, ICICI has been ahead of HDFC AMC, along the lines of Nippon India AMC.
Based on quarterly average AUM taken at different points over the past 3 years, ICICI Pru AMC’s growth has consistently outpaced SBI AMC and has often been above HDFC AMC as well.
#2 Diversification beyond mutual funds
The mutual funds business accounts for a solid 93% of ICICI Pru’s total AUM. But the AMC has begun to drive its PMS and AIF businesses. The PMS AUM grew 196% in FY24 and again by 60% in FY25. The AIF AUM grew 38% in FY 25. To put this in context, growth in the MF AUM clocked 29% in FY 25. As a share of revenue, PMS+AIF management fee jumped to 14% in the first half of FY26 compared to the 8% in FY23.
This focus on non-MF AUM is important for a few reasons. One, these schemes offer higher management fees. A rough calculation indicates that ICICI Pru AMC clocked an approximate 1.5-1.8% revenue yield on the PMS+AIF AUM compared to the 0.45% on the MF AUM in the past 3 years. PMS and AIF are also regulatorily less restrictive on management fees compared to mutual funds.
Two, they help tap into the growing affluent and mass-affluent segment that are looking for differentiated investment options. It also helps balance the potential growth moderation in the MF segment – the high-growth phase in MF AUM came about in the post-Covid period with new investors stepping in. This will necessarily moderate gradually. This also comes at a time where there is increasing competition in the MF space.
On this front, ICICI Pru appears to be more proactive than other MF AMCs. HDFC AMC’s PMS AUM stands at about Rs 5,427 crore as of October 2025 according to SEBI filings, compared to ICICI Pru AMC’s Rs 27,403 crore. ICICI Pru AMC can also leverage its MF distributor network to push its PMS and AIF business; given that distributors cater to a wide range of investors, offering a full suite of products will help increase and retain AUM per distributor.
#3 Strong financials and return ratios
Revenues for ICICI Pru AMC have grown 39% and 26% in FY 25 and FY 24 over the year-ago periods. In comparison, HDFC AMC clocked better growth in FY24, but undershot ICICI in FY25. The first half of this fiscal has also seen ICICI Pru AMC grow faster at 25%. Apart from a better AUM growth translating into revenue growth, ICICI Pru AMC also appears to have gained from the PMS and AIF expansion. Management fee from this segment nearly doubled in FY25, and has clocked a 40% growth in H1FY26 as well.
The revenue yield (total fee earned as a proportion of total AUM) has held stable at about 0.52% for the AMC based on data shared in the RHP. A dip in the MF-book yield appears to have been made up by the uptick in the PMS+AIF yield.
However, ICICI Pru forks out significantly higher than peers in commissions to distributors. This is inevitable if AUM has to expand on the PMS and AIF front. Commission expenses have steadily moved higher over the years, accounting for 7.3% of fee income now against the 4% in FY23-24. This level is likely to continue given the AMC’s intention to drive AUM growth across its product portfolio. The AMC controlled other expenses such as staff and promotional expenses to maintain profit margins.
EBITDA margins have held at 73-75% since FY23. Margins are lower than HDFC AMC’s 80% levels, but given that ICICI is more aggressive in achieving scale, this is only to be expected. ICICI’s margins are higher than the 65%-levels of Nippon India AMC, which is similarly aggressive in AUM expansion.
However, ICICI Pru AMC has been a strong dividend payer, forking out 75-85% of earnings as dividends in the past few years. Along with high margins, this stable equity base has helped it clock strong ROE; this figure stood at 70% in FY 23 and moved up to 82.8% by FY25. This is significantly higher than other listed AMCs. While dividend payouts may continue at a similar pace, as the AMC business is not capital intensive, the AMC last month made a bonus issue of 1.8 shares for every share held. To this extent, retained earnings available to new shareholders will dip.
Valuations
Based on annualised FY26 earnings, the ICICI IPO PE works out to 33 times. This is at a good discount to HDFC AMC’s annualised PE of 37 times and Nippon India AMC’s 35 times. ICICI Pru AMC’s 2-year earnings CAGR clocks in at a good 32%. Valuations are higher than smaller listed players such as UTI AMC and ABSL AMC, but then ICICI Pru AMC is by far bigger with higher margins and ROE. At the upper end of the price band, the post-listing marketcap would stand at Rs 107,007 crore, a shade below HDFC AMC’s Rs 109,600 crore.
Risks
Being a highly regulated entity, changes in regulations pose risks across mutual funds, PMS, and AIF, with mutual funds being especially vulnerable. SEBI has already comprehensively overhauled and brought down fund expense ratios and commissions that can be paid to distributors. Further tweaks can bring down revenue yields, and unless the AMC is able to control costs, this can impact margins.
This apart, AUM growth comes from two factors –market return and net fresh investments. A flat to falling market will directly limit AUM growth. The consequent impact of market corrections on investor flows and redemptions can further pressure AUM. A slowdown in fresh investments can also limit AUM growth. Intensifying competition in mutual funds, PMS and AIF can hit new investments, though ICICI Pru AMC has so far shown an ability to defend its market share in mutual funds.
ICICI Pru AMC pays a license fee of 1% of the previous year’s PAT to ICICI Bank for use of the ICICI trademark. Any increase in this fee can dent margins.
Our recommendation
ICICI Pru AMC ticks the boxes for a high-quality, high-margin, scalable business that can form part of long-term portfolios. The IPO is priced at reasonable valuations compared to peers. The potential for high and steady dividends are also key positives. If you already hold the stock of HDFC AMC then this cannot necessarily complement it. Make sure you do not go overweight on the sector as their fortunes move alike.
Please note that this recommendation does not take into consideration listing gains.
6 thoughts on “ICICI Prudential AMC IPO – Should you subscribe?”
Even as I agree with growth profile, it is not cheap and only marginally priced less by 10%-ish, a discount which will quickly vanish post listing.
This call is on the IPO 🙂 We’ll see whether to continue with a Buy call on it post listing. But given the growth, margins, and the nature of business, it is not an expensive stock. – thanks, Bhavana
Thanks for the review of the IPru IPO. One significant risk is the key man risk in Naren. The last few years have seen Naren being in the forefront (sometimes sounding more like a sales head). His contrarian views have yielded good results (the India Opps fund will bear testimony). Should he retire soon, need to see if the DNA changes as a result.
Yes, Mr Naren often dons a sales hat 🙂 We have discussed any potential impact in the other comment. – thanks, Bhavan
Thanks for the article Bhavna. I feel the planned retirement of S Naren is also a big risk factor for the AMC. He has been the Key factor for the prolonged success of the AMC. What is your take on this?
Yes, Mr Naren has been the face of ICICI Pru AMC for long and his stepping down would be a key development. But ICICI has several fund managers already in place for all their funds (Naren is CIO primarily, and funds where he is a manager has co-managers as well); their funds are not fully reliant on Mr Naren alone. So his retirement, from a fund management perspective, may not cause too much disruption. From a broader image perspective, any such move would most likely be phased and the AMC would start to build up its other managers to establish trust. So we’re not too worried on that front. HDFC AMC also had Mr Prashant Jain at the front and centre, and his departure had been handled well. – thanks, Bhavana