The survival of the UTI MF brand depends on who acquires the AMC. Media reports say the Fund has been valued at Rs 2,000 crore, which is a hefty 8% of its AUM of Rs 22,000 crore, as against the industry average of 5%. The government can hope to get this value only from a foreign fund, or by persuading the existing sponsors (SBI MF, Bank of Baroda, LIC and Punjab National Bank).
However, UTIs sponsors have strong individual brand names and would have little incentive to nurture the UTI brand in the long run. This would be true of any large foreign fund, in the unlikely event that it is allowed to bid for UTI MF. This is probably why unofficial valuation reports of UTI MF were much lower when there was talk of a sale to SBI Mutual Fund. No doubt, the fear of opposition from its Left allies to SBI MFs 37% equity partner, Societe Generale, appears to have forced a change of heart. This could be a blessing in disguise for UTI MF. Joint ownership has worked well since 2001: all it needs is for the government to distance itself from UTI MF and allow it to operate independently, conforming to all regulatory norms that apply to other MFs.
Another and rather non-controversial divestment, which is long overdue, is the winding up of the specified undertaking, UTI-I, and the sale of its holdings in several subsidiaries and institutions, in-cluding rating agencies IL&FS, UTI Bank, NSE and NSDL.