Decks cleared for UTI AMC IPO

Fund house gets in-principal govt nod; Offer document likely to be filed early-2017; May fetch valuation of $1 billion

Decks have been cleared for the country’s first mutual fund initial public offering (IPO). According to highly placed sources, UTI Asset Management Company (AMC), India’s sixth largest mutual fund house, has obtained the finance ministry’s in-principle approval to go public.

The AMC plans to file its offer document with the Securities and Exchange Board of India (Sebi) early next year. The move would allow partial exit to UTI MF’s four public-sector unit sponsors – State Bank of India, Life Insurance Corporation of India, Bank of Baroda, and Punjab National Bank – which own 18.5 per cent each in the fund house, while the remaining 26 per cent is held by US-based investment firm T Rowe Price.

According to Leo Puri, managing director of UTI AMC, which manages assets worth Rs 3 lakh crore, the company is eyeing a valuation of $1 billion.

Puri said the IPO, though an offer for sale by existing shareholders, might also contain some fresh components.

“Based on our initial discussion with investment banks, we are confident that the IPO is likely to be very successful given the development of business and level of interest among global and domestic investors,” said Puri, adding that the valuation for the fund house could be in excess of $1 billion (around Rs 6,800 crore).

UTI MF had average assets under management (AUM) of Rs 1.27 lakh crore for the September 2016 quarter. Besides, it manages another Rs 1.7 lakh crore of assets across other segments including offshore and pension.

Manoj Nagpal, chief executive officer, Outlook Asia Capital, said UTI AMC’s IPO would encourage other fund houses, too, to go public. “At present, most AMCs are backed by big business houses. Listing will provide them their own identify and also will also help in development of the market.”

Puri said the listing would address the issue of conflict of interest and also help in the development of India’s capital market. “When the fund house was floated, the four stakeholders were the temporary custodians as they had floated their own AMCs. It was envisaged that over time these shareholders would exit.”

Sebi regulations don’t allow one sponsor to float more than one AMC.

Puri said the listing would also provide a transparent way in establishing fair price.

UTI AMC assets
(Till September)

Across mutual funds
Rs 1.27 lakh crore
Total AUM
Rs 3 lakh crore