Stake sale violation alleged; UTI MF terms charges 'frivolous'

Raking up a six-year-old issue, a self-proclaimed 'shareholder association' of UTI Mutual Fund today alleged violation of rules in the 26 per cent stake sale of January 2010 by four PSUs in the fund house, which termed the charge as "totally irresponsible and frivolous".
Addressing journalists at a press conference at the Press Club here, the All-India UTI MF Shareholders Association also demanded a Parliamentary panel probe into the 26 per cent stake sale in the fifth largest fund house to US-based investor T Rowe Price by the four state-owned entities.
Incidentally, the demand came ahead of the proposed IPO of UTI Asset Management Company, which runs UTI MF, even as earlier pleas by this grouping has been rejected by the court.

Reacting to the allegations made by the association, UTI AMC said that "the statements made by the self-styled 'shareholder association', representing a negligible shareholding perhaps acquired from shares granted in an ESOP scheme to UTI AMC employees, has neither a legal nor a factual basis".
"The statement is totally irresponsible and frivolous. It appears to be the work of professional troublemakers with no substantive link to UTI AMC. We shall consider whether the lies and misstatements give rise to a cause of action, but as responsible media, it scarcely deserves attention," the fund house said in reply to queries in this regard.

The state-owned UTI MF is the fifth largest MF player in a highly competitive market with over Rs one lakh crore of assets under management.

After the Unit 62 crisis in the early 2000s, the then largest MF, Unit Trust of India, was spun off into three entities -- UTI Trustee Company, UTI Asset Management Company and the present-day Axis Bank -- in 2003.
The government holds its stake in UTI AMC and UTI Trustee Company through State Bank of India, Punjab National Bank, Bank of Baroda and LIC of India, who own equal stake.
These four PSUs -- LIC, SBI, BoB and PNB -- had diluted 6.5 per cent stake each in the fund house to T Rowe Price in January 2010, constituting 26 per cent for an undisclosed sum.

The association today alleged that the stake sale by these four PSUs took place in sheer violation of norms and therefore they want the government to make them buy back their shares. The association is also opposed to the proposed IPO plan of UTI MF.