UTI AMC IPO slated to hit markets this month

The initial public offering (IPO) of UTI AMC is slated to hit the markets this month. Sources in the industry said the fund house will launch its IPO on September 29. However, the price band of the issue is not known.

The Securities and Exchange Board of India (Sebi) had given its approval for the IPO in June this year. The issue is likely to fetch shareholders around Rs 3,000-3,500 crore, claim market participants. Five shareholders of the UTI AMC will be selling nearly 3.89 crore shares through the IPO.

The IPO will see the shareholding of three public sector undertaking (PSU) shareholders – State Bank of India (SBI), Life Insurance Corporation of India (LIC) and Bank of Baroda – go down to just below 10% each, while that of Punjab National Bank (PNB) will go down to 15.24%. Currently, SBI, LIC, BoB and PNB hold 18.24% each in the fund house.

The shareholding of US investment firm T Rowe Price will go down to 23%, from the current 26%, after the IPO. Data from the Association of Mutual Funds in India show that UTI MF has an average assets under management of Rs 1.33 lakh crore during the April-June quarter.

In December last year, Sebi had directed LIC, SBI and BoB to bring down their shareholding and voting rights in UTI AMC and UTI Trustee to below 10% on or before December 31, 2020. It had said that in the event of non-compliance with the directions, the shareholding and voting rights of the three companies in UTI AMC and UTI Trustee in excess of 9.99% and corporate benefits shall stand frozen till such time they comply with the aforesaid directions.

Currently, there are two fund houses – HDFC AMC and Nippon Life India AMC – which have their shares listed on the exchanges.

Kotak Mahindra Capital, Axis Capital, Citigroup Global Markets India, DSP Merrill Lynch, ICICI Securities, JM Financial and SBI Capital Markets are the book running lead managers to the offer.