New Delhi: HDFC Asset Management Company, the country's largest mutual fund firm, has received Sebi's go-ahead to float an initial public offer.

The company had filed draft papers with the Securities and Exchange Board of India (Sebi) in March and received its "observations" on June 22, according to the latest update with the market watchdog.

Sebi's observations are necessary for any company to launch public issues such as a rights issue, an initial public offer (IPO) and a follow-on public offer (FPO).

HDFC AMC operates as a joint venture between Housing Development Finance Corporation (HDFC) and Standard Life Investments.

Going by the draft papers, the proposed IPO offers up to 2.54 crore equity shares of the fund house through an offer for sale of 85.92 lakh shares by HDFC and up to 1.68 crore shares by Standard Life.

The offer comprises a net offer to the public of up to 2.21 crore equity shares, a reservation of up to 3.20 lakh shares for purchase by HDFC AMC employees.

Besides, 24 lakh shares have been reserved for HDFC shareholders.

Earlier, the regulator had kept HDFC AMC's proposed IPO in abeyance "for examination of past violations".

HDFC Asset Management Company, which has a total assets under management of more than Rs 3 lakh crore at the end of March, may become the second AMC to hit the markets after Reliance Nippon Life AMC.