UTI MF may defer IPO to July; board meet today

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Saturday , May 17, 2008 at 0103 hrs India’s largest asset manager, UTI Mutual Fund, may defer its initial public offering (IPO) to July in view of the looming financial turmoil in global markets. The board of UTI Asset Management Company is meeting in Mumbai on Saturday to take a decision.

Market sources said the merchant bankers to the UTI MF issue have advised a public offer in July, though originally scheduled in April, as the global financial markets are volatile due to the sub-prime mortgage crisis. Apart from the subprime factor, inflationary pressures and hardening interest rates have also made the domestic market volatile from January this year. The total value of the IPO is expected to be above Rs 2,200 crore.

After filing the red herring prospectus with Sebi on January 18, senior officials of UTI MF maintained that the entire IPO process will be completed by April. The change of the guard at Sebi, however, has caused a delay in getting the green signal. The present chairman, CB Bhave, took charge from M Damodaran in the third week of February. UTI MF’s chairman & managing director UK Sinha was also in the race for the chairmanship of Sebi. The fund house has received the final nod from the regulator in the third week of April.

Union finance secretary Duvvuri Subbarao has taken stock of the situation with the senior managment team led by UK Sinha on Friday in Mumbai. UTI MF is bullish about its IPO getting subscribed fully.

The four sponsors of UTI Asset Management Company Ltd are expected to dilute up to 50% stake in the company through the IPO.

The four sponsors--State Bank of India, Life Insurance Corporation of India, Punjab National Bank and Bank of Baroda--individually hold 25% each in UTI MF.