The Indian mutual fund industry opened up to the private sector in 1993. During its 24-year journey, the industry has seen numerous rounds of entries and exits by different entities. It has also seen significant growth and consolidation over this period. Yet, it remained privately owned during this entire phase. No mutual fund chose to come out with an initial public offering (IPO) during this period. The two bull markets of 2000 and 2008 did not really create any urgency in the industry to list. But this time it seems different. Every large mutual fund company in the industry is considering monetizing the asset management business. Soon, we could well see half a dozen listed names among mutual funds. Everybody is looking at the listing opportunity very differently this time.
What is it that has changed the minds of mutual funds sponsors and why it is so important for them to list? Firstly, it is important to understand the architecture of the industry and its operating model. The architecture and model of the industry have been reasonably static for long till about a few years ago. Relative to history, we see a growing urgency to change these, and regulation is the key driver. It is in the context of the regulatory urgency that this sudden rush to list becomes interesting.
