UTI Asset Management Company, the country’s fifth largest mutual fund manager, has proposed an initial public offering (IPO) plan to the government to provide an exit to its four state-run sponsors—State Bank of India (SBI), Life Insurance Corp. of India (LIC), Bank of Baroda (BoB) and Punjab National Bank (PNB).
At a meeting with the government late March 2016, the fund house proposed an IPO to divest at least 26% of the promoter stake, which will allow a partial exit of the four sponsors in equal proportion.
At present, each of the four state-run sponsors holds an 18.5% stake in the paid-up capital of UTI Asset Management, while the rest is held by T. Rowe Price International Ltd.
“UTI has proposed an IPO of at least 26% promoter stake, which could include partly primary market stake sale and partly secondary market sale. The government has to approve the proposal for enabling UTI Asset Management Co. to go public, which would eventually provide an exit to the four sponsors,” as per reports.
UTI Asset Management, which managed assets worth an average Rs.1.06 trillion in the December quarter, has been toying with the idea of an IPO for the past seven years in order to provide an exit to the four sponsors, which run their own asset management businesses separately. UTI Asset Management Co. had average assets under management of Rs.92,730.23 crore across its mutual fund schemes during the April-June quarter of 2015-16.
A Securities and Exchange Board of India (Sebi) norm does not allow the sponsor of one asset management company to be associated with the sponsors or promoters of another.
Considering the brand UTI, an IPO by the UTI AMC will most likely get a strong response, said Prithvi Haldea, the chairman and managing director of Prime Database, a Delhi-based primary market analytics firm.
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