The Securities and Exchange Board of India (Sebi) has been insisting that UTI’s four domestic shareholders will have to pare their stakes to less than 10 per cent each and rejected the requests of shareholders for extension of stake sale.
Life Insurance Corporation of India (LIC) has invited bids from merchant bankers for disinvestment of its “stake in equity shares of an identified unlisted company through a transparent bidding process”. While Life Insurance Corporation did not disclose the name of the “unlisted company” in an advertisement, sources said the company is likely to be UTI Mutual Fund. UTI Mutual Fund’s four domestic shareholders — Life Insurance Corporation, State Bank of India, Punjab National Bank and Bank of Baroda — hold around 18.5 per cent stake each. The four stakeholders also have their own asset management companies (AMCs).
As the crossholding rules of market regulator Sebi applies to all the four promoters, they will have to bring down the stake in UTI Mutual Fund below 10 per cent and give board seats. US-based fund T Rowe Price holds the remaining 26 per cent stake in UTI Mutual Fund.
In March 2018, Sebi had introduced crossholding limits in mutual funds to eliminate potential conflicts of interest. The markets regulator then mandated that if a shareholder has more than 10 per cent interest in a mutual fund, it cannot hold a similar-sized stake in another fund house and would also have to give up its board positions.