1. UTI to take one more shot at listing, LIC remains on the fence

UTI to take one more shot at listing, LIC remains on the fence

UTI Asset Management Company (AMC) will take one more shot at getting itself listed at a shareholders’ meeting in Mumbai on August 5.

By: | Mumbai | Published: August 1, 2017 8:20 AM
UTI , LIC, UTI shareholders, ICICI Securities, AMC, finance ministry, Sunil Mehta , SBI, ICICI Prudential AMC , birla sun, Arundhati Bhattacharya, Punjab National Bank As per UTI’s shareholder agreement, shareholders have the right to direct the firm to appoint a banker to establish the feasibility of listing — ICICI Securities was appointed for this after BoB, PNB and US firm T Rowe Price invoked this clause. (PTI)

UTI Asset Management Company (AMC) will take one more shot at getting itself listed at a shareholders’ meeting in Mumbai on August 5. While three of its four PSU shareholders have agreed to the proposal, Life Insurance Corporation of India (LIC) continues to remain ambivalent. State Bank of India (SBI) will be represented by chairman Arundhati Bhattacharya, Punjab National Bank (PNB) by managing director and CEO Sunil Mehta and Bank of Baroda (BoB) by managing director and CEO PS Jayakumar. The listing has been stuck despite SBI, PNB and BoB agreeing to it in early February.

As per UTI’s shareholder agreement, shareholders have the right to direct the firm to appoint a banker to establish the feasibility of listing — ICICI Securities was appointed for this after BoB, PNB and US firm T Rowe Price invoked this clause. UTI’s board had passed a unanimous resolution in favour of the listing, and Saturday’s meeting is to take this forward. Previous shareholder meetings have not been able to resolve the impasse.While LIC has been keen to buy out all other shareholders, the finance ministry was keen on a small 10% listing. Since this would result in T Rowe Price’s shareholding falling below the critical veto level, it refused to accept this — it was this veto power that allowed it to resist the finance ministry’s pressure to appoint its candidate as CMD. T Rowe Price, however, has communicated that it is willing to dilute to below 26% if there is a broader listing, the mutual fund will be board-managed and it does not want any veto power. It is not clear what the finance ministry’s current view is since all the banks are keen to list so that they can use the funds to meet their capital requirements.

Apart from the six-year-old boardroom battle that has resulted in the mutual fund slipping two notches in terms of assets under management (see graphic), UTI has also run foul of Securities and Exchange Board of India (Sebi) regulations that do not allow any sponsor to be in charge of more than one mutual fund — SBI, PNB, BoB and LIC each run their own mutual funds. SBI, BoB and PNB hold stakes of 18.5% each in in UTI AMC, while remaining 26% is owned by T Rowe Price. However, an exception was made after the US-64 debacle and when SBI, PNB, BoB and LIC were asked to buy into UTI, they were given a one-time waiver even though they run mutual funds of their own.

UTI’s assets under management (AUM) in the April-June, 2017 quarter was close to Rs 1.45 lakh crore. Currently, ICICI Prudential AMC and HDFC AMC enjoy the top two positions in the industry with an average AUM of Rs 2.60 lakh crore and 2.53 lakh crore, respectively. Reliance Nippon Life AMC, Birla Sun Life AMC and SBI MF are currently ahead of UTI AMC on the basis of their AUM as in the April-June quarter.

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