The shares of UTI Asset Management Company (AMC) have started showing uptick in prices in off-market private placements in light of the visibility over its long-awaited public issue, with market participants suggesting that the prices have gained over 30 per cent in last one month. Further, market sources add the AMC is likely to file its draft red herring prospectus this week.
“We had been offering these shares — which we had sourced through different channels — at around Rs 850 last month. Now, the prices are close to Rs 1,100 per share,” said a dealer with a broking house, which sources and offers unlisted shares to interested clients.
Unlisted shares typically see higher demand in the grey market when the initial public offering (IPO) of the company is closer to hit the primary markets.
At the prices at which the AMC’s unlisted shares are getting valued, the overall valuation for the AMC could be in excess of Rs 13,000 crore, said an investment banker, requesting anonymity.
However, analysts tracking the mutual fund (MF) industry are of the view that final price discovery would depend upon various factors, including the assets managed by the AMC, its earnings trajectory, and other parameters.
According to data from Association of Mutual Funds in India, the AMC managed average assets of Rs 1.54 trillion, for September-ending quarter. Compared to corresponding period last year, the asset-size has shrunk by seven per cent.
For 2018-2019, the AMC reported profit after tax of Rs 348 crore in 2018-2019, which was just two per cent higher than last year.
The Securities and Exchange Board of India (Sebi) has been nudging the PSU investors to facilitate the IPO process. Earlier in the month, Sebi gave an ultimatum to the PSU investors bring down their stake before end of next year, or face freezing of their voting rights on the excess shareholding.
The section 7B of Sebi MF Regulations, notified in March 2018, said no sponsor of mutual fund can have 10 per cent or more of shareholding or voting rights in the asset management company or trustee company of any other mutual fund.
Except for Punjab National Bank (PNB) — which exited its AMC joint-venture last year — Life Insurance Corporation of India (LIC), Bank of Baroda (BOB) and State Bank of India (SBI) are sponsors in other existing AMCs. Currently, all four PSUs hold 18.24 per cent each in UTI AMC.
Earlier this month, SBI that said that it would sell its 8.25 per cent stake through the IPO.
The US-based asset manager T Rowe Price — which is the only private investor in the AMC (holding 26 per cent stake) — has been clamoring for the IPO to realise the value of its investments made back in 2010.
However, the IPO has got pushed back due to disagreements among investors and lack of stable leadership at the top.