Sebi warned the companies that if they do not comply with the norms by December 31, the regulator would freeze their corporate benefits as well as shareholding and voting rights.
The board of Bank of Baroda (BoB) on Monday accepted the proposal to divest around 10% stake in UTI Asset Management Company (AMC) through an initial public offering. The announcement comes less than a week after the State Bank of India (SBI) decided to divest around 8.25% stake in UTI AMC. Earlier this month, the Securities and Exchange Board of India (Sebi), in an order, asked the SBI, Bank of Baroda and others to pare stake in UTI AMC to comply with the cross holding norms that Sebi had released in 2018.
Sebi warned the companies that if they do not comply with the norms by December 31, the regulator would freeze their corporate benefits as well as shareholding and voting rights. ICICI Securities, CitiGroup Global Markets India and Kotak Mahindra Capital are some of the advisers selected for the planned initial public offering, which is slated to hit the market sometime in 2020.
In an exchange filing, BoB said: “The investment committee of our Bank, in its meeting held today, has approved the participation of Bank of Baroda in the proposed initial public offering of equity shares of UTI Asset Management Company by way of an ‘offer for sale’ of up to 1,04,59,949 equity shares held by it.”
This means that the bank is selling more than half of its shares in the company. Currently, BoB holds around 18.24% stake in the company. SBI, Life Insurance Corporation (LIC) and Punjab National Bank (PNB) also hold 18.24% stake each in UTI. The remaining 26% stake in UTI AMC is held by T Rowe Price.
T Rowe Price, the majority shareholder of the company, had last year filed a petition in the Bombay High Court, stating that the PSU shareholders were trying to scuttle the plans of the asset management company’s IPO. They later withdrew the petition stating that they were in talks with the Union government and shareholder PSUs to comply with the cross shareholder norms.
As of the fiscal year ended on March 31, UTI AMC reported a profit of `348 crore. It had around 195 schemes in operation with an average asset under management of around `1.60 lakh crore. The company was incorporated in 2002 and has around 150 branches.