UTI Asset management Company’s much-awaited initial public offering (IPO) is most likely to open for subscription in middle of next month.
The board of the company, including representatives from the sponsors — State Bank of India, Life Insurance Corporation, Punjab National Bank and Bank of Baroda, held a meeting on Tuesday evening to discuss the future course of action in this regard.
The three-month window for the IPO that received Sebi approval in April, closes on July 22. In such a scenario, the company will either have to come with its IPO before July 22 or will have to postpone the IPO.
Several factors have delayed the offering that aims to raise about Rs 2,000 crore.
“Bad market condition coupled with the sponsors’ advice has resulted in the delay,” said a senior official with UTI AMC. “In all likelihood the IPO should be out by the second or third week of July.”
The stock market has been on a downhill journey for nearly a month as investors have turned jittery with a sharp spike in inflation and a possible deepening of the economic slowdown.
UTI AMC plans to sell 38.8 per cent stake being held in equal proportion by the four sponsors SBI, LIC, PNB and BOB.
The proposed offering puts the company’s valuation at more than Rs 5,100 crore, or about 10 per cent of total assets under its management.
In December 2007, when Eton Park purchased 5 per cent stake in Reliance Capital Asset Management, the fund house was valued at Rs 10,000 crore, or 13 per cent of the assets under its management then. Similarly, IDFC valued Standard Chartered AMC at 5.8 per cent of its assets under management, while buying it for $205 billion (more than Rs 800 crore) on March 10, 2008.
UTI AMC registered net profit of Rs 72.7 crore for the six-month period ending September 2007. Annualising it for full year makes a net profit of Rs 145 crore for the year 2007-08.