UTI Mutual Fund, the country oldest fund house, might revive its initial public offer (IPO) plan after the finance ministry's nod, which is expected soon.
"There is proposal for IPO of UTI Mutual Fund and the finance ministry is looking at it. The ministry after consideration can give in-principle approval for public offer," sources said.
The government has a stake in UTI Mutual Fund through public sector banks and insurance companies. State Bank of India, Punjab National Bank, Bank of Baroda and Life Insurance Corporation of India (LIC) hold a stake in UTI Mutual Fund on behalf of the government.
They jointly hold 74 per cent stake in the fund house while the remaining 26 per cent stake is with the US-based investment firm T Rowe Price.
In 2008, UTI Asset Management Company (AMC) deferred its IPO owing to uncertain market conditions. The fund house had proposed to sell 4.8 crore equity shares through IPO. Subsequently in 2009 all the four sponsors of UTI diluted 6.5 per cent each in favour of T Rowe Price.
"The IPO would not be a revenue raising measure but is a governance measure," sources said, adding, the IPO will make UTI AMC a market-based mutual fund.
Listing of UTI AMC would strengthen corporate governance of the mutual fund and this development would result in other asset management companies to go for listing, the sources added.
The stake sale would also help in meeting the minimum 25 per cent public float norm.
However, market regulator Securities and Exchange Board of Indis (Sebi) has not fixed any time limit for this.
During the first quarter of the current financial year, UTI Mutual Fund's average assets under management (AUM) was Rs 79,441 crore.
The country's 44 fund houses together had an average AUM of Rs 9.85 lakh crore during the April-June quarter, up from Rs 9.05 lakh crore in the preceding three months.
