As domestic investors lock horns with a foreign shareholder at UTI Mutual Fund, its chief Leo Puri has said he does not want an extension as long as there are differences within the board. The row has escalated with the domestic shareholders asking regulator Sebi for more time to meet a regulatory diktat to reduce their stakes and also want the foreign investor to be asked to do the same.
Officials, however, said the regulator does not see merit in this demand as this particular foreign shareholder, T Rowe Price of the US, does not have cross holding in another fund house in India. The diktat applies to some Indian shareholders only in case of UTI Mutual Fund as they have their own fund houses as well.
Executives at the fund house and its various investors, including domestic PSUs, said Puri has conveyed to all stakeholders that he does not want an extension beyond his current tenure ending tomorrow if the board remains divided, even as T Rowe Price wants him to stay on till at least the IPO of UTI Mutual Fund and has even approached Bombay High Court on this issue.
When contacted by PTI, Puri confirmed the move but did not elaborate. He is also said to have defended the performance of the fund house during his five-year tenure, amid allegations from some quarters that the growth has been muted during his leadership. T Rowe Price International, which owns 26 per cent stake in UTI AMC, had last week approached the court seeking a direction to the Finance Ministry and markets regulator Sebi to prevent certain PSUs from stalling the company’s bid to come up with an initial public offer (IPO).
In its petition, T Rowe Price had claimed that four public sector undertakings — State Bank of India, Life Insurance Corporation, Punjab National Bank and Bank of Baroda — were trying to stall the company’s proposed IPO. The petition had also sought implementation of Sebi’s rules and regulations and to extend the term of Puri for another year to see the IPO through.
According to T Rowe Price, the four PSUs, which together own 74 per cent in UTI AMC, are not in favour of granting Puri a second term. The petition had also sought a direction to the Securities and Exchange Board of India (Sebi) to ask the four domestic shareholders to bring down their holding in the fund house to 10 per cent each from the present 18.50 per cent. It claimed that as per a regulatory order issued by Sebi in March this year, no shareholder of one asset management company can own more than 10 per cent in another, and those who own such stakes need to bring them down.
The petition will be placed before a division bench of the high court which is likely to hear it on August 16, according to the high court’s website.
Source: Financial Express