UTI Shareholders Plans To Dilute Its Stake via Public Offering
The most trusted wealth creator in India is UTI AMC. It is also known as the Indian oldest mutual fund. UTI AMC shareholders to sell stake via IPO. The public offering does expect to hit the market in the next six months. Shareholders of UTI Asset Management Company decided to get rid of their part of the stake through an initial public offering via offer for sale.
According to the reports, the officials of UTI AMC have already selected investment bankers for the issue and those are in the final stage. The IPO plan came out after the Sebi directed the fund house to comply with cross-holding rules.
As of the source, the four domestic shareholders along with LIC (Life Insurance Corporation of India) were promoted UTI Asset Management Company. LIC’s stake valued at Rs 12,000-13,000 crore approximately. The fund house expects to raise about Rs 2,500 to 3,000 crore through IPO, said a person familiar with this matter.
The Securities and Exchange Board of India had introduced cross-holding rules in March 2018. The main purpose of these rules is for mutual funds to reduce latent conflicts of interest. As of cross-holding limits, a shareholder has at least a 10 percent interest in a mutual fund. Moreover, the same one should not have the same value in another fund and would also have to give up its board positions.
LIC, State Bank of India, Punjab National Bank and Bank of Baroda are the four domestic shareholders of UTI. LIC, SBI, BOB, and PNB held 18.5 percent of stake each in UTI AMC. These also have their Asset Management Companies. As of the regulatory norms, Cross-holding limits should apply to all the four domestic shareholders. The remaining 26% of stake in UTI AMC held by US asset manager T Rowe. In March 2019, the four domestic shareholders of UTI AMC had pared their stake less than 10 percent.
A source said that the IPO documentation process will commence once the investment bankers are set. Later the valuations and IPO size will finalize. Another source revealed that the merchant bankers will finalize in the next couple of weeks. Moreover, the IPO expects to launch in March-April 2020.
UTI AMC along with its five shareholders did not respond to the queries.
If the UTI IPO is finalized, then it will be the third AMC to be listed on Stock Exchange after Reliance Nippon Life AMC and HDFC AMC.