UTI stake sale can't be a top-down decision: Puri

UTI Asset Management Company (AMC) Managing Director Leo Puri says listing is the only option left for India's fifth-largest fund house, which manages Rs 92,000 crore of assets. In an interview with Business Standard, he says whoever wants to increase stake in the company should do so through the open market route.

Puri's comments come amid reports that at least two of the five stakeholders in the AMC - State Bank of India (SBI) and Life Insurance Corporation of India (LIC) - have expressed interest to go for a negotiated stake buy. SBI, LIC, Punjab National Bank and Bank of Baroda hold equal stakes, totalling 74 per cent, in the AMC. T Rowe Price holds the rest.

Puri said the UTI board hadn't received any proposal in this regard so far, adding if it had, it could have been evaluated, as the board was duty bound to do so.

However, he is clearly not in favour of any negotiated stake buy. "We are flattered that there is so much interest...we must be doing something right at the moment," he said, adding, "The process by which this expression is expressed or evaluated should not be in some dark corner of a room in Delhi or somewhere else. It needs to be under the open scrutiny of the market, where all stakeholders will have to present their case."

He says any partner or other players can show expression of interest even after listing. "Our partners are in a situation in which there is conflict of interest. I don't think this situation can be permitted to persist. It is a violation of the regulations framed by the Securities and Exchange Board of India."

He said such issues couldn't be solved through a top-down approach, as the risk of getting it wrong was very high. "Any method other than listing will lead to a lot of problems," he adds.

The UTI board has passed a resolution for listing and has sent it to the finance ministry for approval.

Puri expects the listing to happen this financial year. There shouldn't be any hiccups in this, Puri said, as the AMC had received an approval to list in 2008 but could not go ahead because of bad market conditions. His confidence is also based on his belief that "no one wants to hold back a performing institution, one that is trying to progress. The more you let these things languish, the more problems you create."

Puri said listing would secure UTI AMC's position as an independent asset manager. "It is better than being a subsidiary of a conglomerate or a bank doing other businesses. It is important for the capital markets to have a group of independent asset managers for its growth. We can be a role model for that, as we will be the first listed independent asset manager," he said.