UTI AMC files IPO papers to raise around Rs 4,000 crore

UTI Asset Management Company (AMC) on Thursday filed its draft red herring prospectus with the Sebi for an initial public offering (IPO). Five shareholders of the company will be selling nearly 3.89 crore shares, adding up to 30.75% of the outstanding equity. The issue will be an offer for sale (OFS) and could fetch shareholders around Rs. 4,000 crore, says an investment banker on condition of anonymity.

Currently, Life Insurance Corporation of India (LIC), State Bank of India (SBI), Punjab National Bank (PNB) and Bank of Baroda (BoB) hold 18.24% each in the AMC. US investment firm T Rowe Price holds 24% in the fund house, totalling 98.96%. After the OFS, their combined holding will be reduced to 68.21%. In the OFS, LIC, SBI and BoB will sell 8.25% stake through IPO, while PNB and T Rowe Price will offload 3% each.

Sebi on Friday directed LIC, SBI and BoB to bring down their shareholding and voting rights in UTI AMC and UTI Trustee below 10% on or before December 31, 2020. According to the Sebi’s regulations which was notified on March 13, 2018, no sponsor or mutual funds can have “10% or more shareholding or voting rights in the asset management company or the trustee company of any other mutual fund; or representation on the board of the asset management company or the trustee company of any other mutual fund”.

The regulator had given one year to comply with the regulations. SBI, LIC and BoB have their respective operations in the mutual fund business.

In August last year, T Rowe Price had filed a case in the Bombay High Court against the government of India asking it to prevent four PSU financial investors from scuttling UTI’s attempts at an IPO. The petition asks for implementation of Sebi’s rules that these four PSUs lower their individual stakes in UTI to 10%. But later, T Rowe Price withdrew its case against Sebi, government of India and four public shareholders of UTI AMC stating that it was in talks with the government on certain issues raised in the plea.

UTI AMC and its predecessor (Unit Trust of India) have been active in the asset management industry for more than 55 years, having established the first mutual fund in India. UTI AMC is the seventh-largest AMC in India in terms of mutual fund QAAUM as of September 30, 2019, according to Crisil, said the offer document. Kotak Mahindra Capital Company, Axis Capital, Citigroup Global Markets India, DSP Merrill Lynch, ICICI Securities, JM Financial and SBI Capital Markets are the book running lead managers to the offer.

Source: Financial Express