US-based investment firm T Rowe Price, the single largest shareholder in UTI AMC with 26% stake, has pitched for an early listing of the mutual fund and said it could consider raising its stake if such an “offer” comes.
The balance stake of UTI AMC, with asset under management (AUM) of R1,05,000 crore (as on February 29), is equally held by State Bank of India (SBI), Life Insurance Corporation (LIC), Bank of Baroda (BoB) and Punjab National Bank (PNB).
“If the government and everybody else wants us to consider increasing (the stake), we will consider that,” James Sellers Riepe, who represents T Rowe Price on the UTI board, told FE on Thursday. Earlier in the day, he held extensive talks with minister of state for finance Jayant Sinha and senior finance ministry officials on issues related the mutual fund’s listing and the desire of PNB and BoB to exit the venture via IPO.
SBI and LIC, on the other hand, have expressed desire to merge UTI AMC into their own mutual fund arms to catapult their position in the industry.
Finance ministry officials said the issues related to UTI were “under submission” and no decision has been taken yet by the government on either listing or divestment of stakes by some public sector institutions, through third party valuation. “We have to see how the interest of the country is protected,” one official, who did not wish to be named, said.
Though the UTI AMC board wrote a letter to the finance ministry requesting for permission for an IPO more than a year ago, it did not move forward as SBI and LIC were in favour of merging the AMC with their own AMCs. While SBI AMC is currently ranked No 5 with AUM of about R1,06,000 crore, it will catapult to the No 1 rank if merged with UTI AMC, which has AUM of R1,05,000 crore. ICICI Prudential, with AUM of R1,74,000 crore, is the top AMC in India. If LIC AMC is merged with UTI, LIC AMC would move up to fifth position. “We think listing is the best thing for UTI and for the 10 million investors that it has,” Riepe said, adding that he was not sure when that would happen.
While SBI and LIC could be looking at boosting their strong presence in mutual fund industry, BoB and PNB reckon that divesting this non-crore business would help strengthen their capital buffer against recent surge in bad loans.
While Rowe Price was in favour of UTI being a board-run company after listing, the ball is now in the finance ministry’s court as the four public sector financial institutions together hold 76% in UTI.
T Rowe manages a broad range of US and international stock, blended asset, bond, and money market mutual funds and other investment portfolios.