UTI Asset Management Company (AMC) plans to launch an initial public offer (IPO) within the next six months. Currently, only two AMCs, Reliance Nippon Life AMC and HDFC AMC, are listed on bourses. UTI AMC is expected to fetch a value of Rs 12,000-13,000 crore and raise funds in the range of Rs 2,500-3,000 crore, according to a report in The Economic Times.
The move to sell shares via IPO is meant to comply with crossholding rules according to Securities and Exchange Board of India's (Sebi) orders.
UTI AMC's four domestic shareholders LIC, State Bank of India (SBI), Punjab National Bank (PNB) and Bank of Baroda (BoB) own 18.5 per cent stake each and also have their own AMCs.
According to crossholding rules introduced by Sebi in March 2018, if a shareholder owns at least a 10 per cent interest in a mutual fund, it cannot hold a similar-sized stake in another fund house and would also have to give up its board positions.
Hence, Sebi's crossholding rule applies to all the four. US asset manager T Rowe Price holds the remaining 26 per cent stake in the AMC.
"Documentation work will start once the investment bankers are appointed. The valuation and the IPO size will be finalised subsequently," the ET report said citing a person aware with the development.
Earlier, the four domestic shareholders were required to pare their stakes to less than 10 per cent each by March 2019, but they could not initiate the stake sale since the fund house did not have a chief executive.
"There has been no progress on that front (appointment of a CEO)," said another person with knowledge of the matter. "We can't wait endlessly for that to happen. It has been decided to proceed with the IPO," the ET report said.
UTI AMC was incorporated on November 14, 2002 and commenced operations from February 1, 2003
The AMC is the investment manager to the schemes of UTI Mutual Fund. It also manages offshore funds and provides support to the Specified Undertaking of the Unit Trust of India.
Edited by Aseem Thapliyal