As a precursor to the complete restructuring of UTI Mutual Fund, UTI Asset Management Company has decided to be listed on Indian bourses before March 2008. According to highly placed sources, India oldest mutual fund and largest in terms of investor base will make its maiden public issue at a valuation of around Rs 4,000 crore.
Legal advisers Amarchand Mangaldas had submitted a plan for the proposed IPO and the restructuring of UTI Asset Management Company’s ownership, sources in UTI Mutual Fund said. The advisers provided four options for the proposed IPO late last month, which will be taken up by the UTI Asset Management Company board in its next meeting.
Besides discovering the value of India’s oldest mutual fund--which has Rs 40,070 crore of assets under management--the proposed IPO is aimed at diluting the promoters’ holding from 75 per cent, at raising fresh resources to fund growth, and at providing stock options to employees.
In 2005, the government transferred the ownership of UTI Mutual Fund to Life Insurance Corporation and three banks – State Bank of India, Punjab National Bank and Bank of Baroda -- for Rs 1,236 crore. Each of them holds 25 per cent in the asset management company.
Under the original agreement of 2005, the government had stated that after two years, the ownership needed to be restructured and finally only one of the sponsors would have complete control. Three of the sponsors would need to exit UTI Asset Management Company by November, the sources said. However, all four want control of UTI Asset Management Company, which has a customer base of around 8.5 million.
If the sponsors do not reach a settlement, UTI Asset Management Company may rope in a global player as a strategic partner. Sources said UTI Asset Management Company was in talks a leading mutual fund company. The transaction is expected to completed before March 2008.
Jaideep Bhattacharya, chief marketing officer, UTI Mutual Fund, said asset management company would be listed to mobilise resources to fund expansion as well as to give stock options to employees. It is not clear whether the asset management company will be listed or a holding company.