Life Insurance Corporation (LIC) continues to stall UTI AMC’s listing although three other PSU shareholders — State Bank of India (SBI), Punjab National Bank(PNB) and Bank of Baroda(BoB) — agreed to a broad-based listing two weeks ago. As a result, the meeting of all the shareholders, which was supposed to take place this week, has been put off, people familiar with the development said.
Later next week, SBI will call a meeting of the other non-LIC shareholders, including US firm T Rowe Price, to discuss the way ahead, they indicated. UTI AMC declined to comment on the issue while a questionnaire sent to LIC remained unanswered.
LIC, it appears, is still keen to try and take over UTI and, with the finance ministry not giving a clear direction, is in no hurry to take a call. The finance ministry, FE has reported earlier, has been in favour of a small 10% listing. Since this would result in T Rowe Price’s stake falling below the critical 26% shareholding level, the US major has refused to accept this. It was T Rowe Price’s veto power that ensured some years ago that the finance ministry was not able to foist its candidate for the CMD’s post.
T Rowe Price, meanwhile, has communicated its willingness to dilute to below 26% since, once UTI is board-managed, it doesn’t need a veto power. Given the stalemate, it is unlikely UTI’s listing will proceed unless there is a clear direction from either the finance ministry or the PMO.
In the past six years since the boardroom battles began at the mutual fund, it has lost its fourth position and moved to the sixth rank in terms of assets under management (AUM).
UTI’s AUM in the October-December 2016 quarter was close to Rs 1.29 lakh crore. Currently, ICICI Prudential AMC and HDFC AMC enjoy the top two positions in the industry with an average AUM of Rs 2.27 lakh crore and 2.21 lakh crore, respectively. Reliance AMC, Birla Sun Life AMC and SBI MF are currently ahead of UTI AMC on the basis of their AUM as in the October-December quarter.
The Securities and Exchange Board of India (Sebi) rules do not allow anyone to own more than one AMC. However, an exception was made after the US-64 debacle when SBI, PNB, BoB and LIC were asked to buy into UTI, and they were given a one-time waiver even though they run mutual funds of their own.