The growth potential for mutual funds in India is immense and there is already a gradual shift happening in household savings with the dominance of physical savings going down amid a growing share of financial savings, said HDFC chairman Deepak Parekh.
While launching the initial public offer (IPO) of HDFC Asset Management Company, Mr. Parekh highlighted the fact that India lags most major economies of the world in terms of the assets under management of mutual funds as a percentage of the gross domestic product (GDP) of the country.
“In India, AUMs of mutual funds as a percentage of GDP is just 11%, while the world average is 62%.
In the U.S., this ratio is 101%, 57% in the U.K. and 30% in Japan,” Mr. Parekh said.
He further said that while India’s macro fundamental factors were looking good at the start of the year, significant changes in the global environment has affected the Indian economy as well.
“... the unfortunate part is that the deterioration in some of the macros in India is largely an outcome of circumstances beyond India’s control,”Mr. Parekh noted.
India insulated
He, however, added that India has been able to stay in acceleration mode since it is a domestic consumption driven economy and that has largely insulated India in times of global uncertainty.
The IPO of HDFC AMC will open on July 21, in which 2.55 crore shares would be offered in a price band of ₹1,095 to ₹1,100.
The IPO worth nearly ₹2,800 crore will see HDFC selling 85.93 lakh shares that will bring to its kitty around ₹950 crore.
HDFC AMC is the second largest fund house in the country in terms of assets under management after ICICI Prudential AMC.
According to Value Research, the fund house had a total AUM of ₹3.01 lakh crore as on June 30.
Meanwhile, shares of HDFC touched a new 52-week high of ₹2,023.90 on Wednesday before closing at ₹2,008.25 gaining nearly 1%.