Bombay High Court impleads T Rowe Price in UTI AMC's stake sale petition

This year the Officers Association filed an interim application pleading urgent hearing of the writ petition ahead of the IPO and to implead T Rowe Price as a respondent

T Rowe Price has been dragged in a case involving UTI Asset Management Company (AMC) and its employee association. 

The Bombay High Court (HC) issued an order last week, impleading T Rowe as a respondent (to hear its views as an affected party) in the plea pertaining to the asset manager’s stake sale to the firm.

In January 2010, the four sponsors of UTI Mutual Fund (MF) — State Bank of India (SBI), Punjab National Bank (PNB), Bank of Baroda (BoB), and Life Insurance Corporation (LIC) of India — had sold 26 per cent stake in UTI AMC and UTI Trustee Company without public notice and inviting public bids for an undisclosed value. This stake sale was later challenged by the All India UTI AMC Officers Association (AIUAOA) in a writ petition before the HC in 2015. 

This year, the AIUAOA filed an interim application, pleading urgent hearing of the writ petition ahead of the initial public offering (IPO) and to implead T Rowe Price as a respondent.

The AIUAOA has observed that the sponsors have further decided to reduce their stake via an IPO. It also made note of a recent media report that spoke about the possibility of these sponsors selling their stake in UTI Trustee Company to T Rowe Price.

“In effect, this amounts to a backdoor acquisition of control by a foreign entity, without any public bids/notice and against the definition of specified company as prescribed under Section 2(h) of UTI Repeal Act, which the Bombay HC will examine under WP 1509/2015,” a release sent by the UTI Retired and VSS Employees Social Association, observed.

The AIUAOA had sent an email to the sponsors recently staking its claim to purchase part or full stake in the UTI Trustee Company if the sponsors decided to sell.

“If stake in UTI Trustee Company can be divested by these sponsors at a low price, it can be purchased by any Indian investor and also by the association on behalf of its members,” it said in a press note.

According to the note, this is the first time a foreign strategic investor in any divestment process is being challenged by an employee association. The impleading will necessitate T Rowe Price to make statutory and compliance disclosures about the litigation globally.

“The association is releasing this statement in the interests of shareholders and prospective investors who may be able to make an informed decision on the stock price of UTI AMC, in view of this pending litigation,” the note observed.

T Rowe Price said it had no comment on the matter.

UTI AMC slid nearly 2 per cent to close at Rs 499.05 apiece on the BSE on Thursday. The benchmark Sensex fell 2.6 per cent.

In the crosshairs

*The Bombay High Court has issued an order to implead T Rowe Price as a respondent in a writ petition pertaining to UTI AMC's stake sale in 2010 

*US-based T Rowe Price Global Investment Services had reportedly acquired 26 per cent stake in UTI AMC for Rs 650 crore

*This made T Rowe the single largest individual stakeholder in UTI MF

*The company had bought 6.5 per cent stake each from sponsors SBI, PNB, BoB and LIC

*UTI AMC's four sponsors had sold stake, allegedly without public notice 

*This stake sale was challenged by the All India UTI AMC Officers Association in a writ petition before the Bombay High Court in 2015

*This year the Association filed an interim application for urgent hearing of writ petition ahead of the IPO

*The Association has written to the sponsors recently staking claim to purchase part or full stake in UTI Trustee Company