Top end of price band: UTI AMC aiming to raise Rs 2,160 crore in IPO

By: |
September 25, 2020 3:30 AM

The data from Association of Mutual Funds in India (Amfi) showed that UTI MF had an average asset under management (AUM) of Rs 1.33 lakh crore as on April-June quarter.

UTI AMC, UTI AMC IPO,UTI is the second largest AMC in India with total AUM of Rs 9,706 billion, and eighth largest AMC in India in terms of mutual fund business.

The much-anticipated initial public offering (IPO) of UTI Asset Management Company (AMC) should fetch it Rs 2,160 crore at the upper end of the price band, giving it market cap of nearly Rs 7,000 crore. The second-largest asset management company by assets under management has fixed the price band of the issue at `552-554 per equity share.

The asset manager will offer 3.89 crore equity shares for sale, which are held by existing shareholders. The IPO will see the shareholding of three public sector undertaking (PSU) shareholders – State Bank of India (SBI), Life Insurance Corporation of India (LIC) and Bank of Baroda (BoB) – go down to just below 10% each, while Punjab National Bank (PNB) will go down to 15.24% from 18.24%. Currently, SBI, LIC and BoB also hold 18.24% each in the fund house. The issue opens on September 29 and will close on October 1.

The shareholding of US investment firm T Rowe Price will go down to 23% from 26% at present after the IPO. The data from Association of Mutual Funds in India (Amfi) showed that UTI MF had an average asset under management (AUM) of Rs 1.33 lakh crore as on April-June quarter.

Imtaiyazur Rahman, CEO and whole-time director of the AMC, said: “Our strategy is to remain focused on the products and customers. Our investment team is fully dedicated to deliver consistent and superior returns. We have established a strong distribution base and will continue to expand. We will strongly and aggressively work in top cities to regain our market share.”

Jaikishan Parmar, senior equity research analyst at Angel Broking, says, “We believe UTI AMC will garner strong interest, as the AMC business is high RoE and cash-generating business. Listed AMC, HDFC trades at 12.8% and Nippon AMC 9% of June AUM. Now final demand for UTI AMC would depend on at what valuation the IPO demands. A valuation less than listed peers would create more demand for UTI AMC.” Based on market cap as a percentage of AUM the valuation is around 5.2% for the UTI MF.

The offer includes a reservation of up to 200,000 equity shares (constituting up to 0.16% of the post-offer paid-up equity share capital of the company) for purchase by eligible employees. The offer less the Employee Reservation Portion is hereinafter referred to as the “Net Offer”. The Offer and the Net Offer would constitute at least 30.75% and 30.59% of the post-offer paid-up equity share capital of the company, respectively.

UTI AMC in the RHP said, a substantial part of its income is largely dependent on the total value and composition of its AUM, as our management fees are usually calculated as a percentage of our AUM. “Our income from management fees for the three-month periods ended June 30, 2020, and June 30, 2019, was Rs 160 crore and Rs 200 crore, respectively, representing 58.8% and 83.6%, respectively, of our total consolidated income for such period,” stated the RHP.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1ICICI Bank Q2 net profit jumps six-fold to Rs 4,251 cr; asset quality improves, NII rises 16%
2Sensex, Nifty back at pre-COVID level this month; will markets start November with gains?
3Nafed floats bids for supply of 15,000 tonnes of imported red onions by November 20