Mumbai - UTI Asset Management Company, controlled by the Indian government, plans to raise about Rs 2,000 crore ($500 million) in an initial public offering (IPO) that would be the first for the country's surging fund management industry. The company, the second largest AMC in India in terms of assets under management (AUM), plans to enter the capital market soon with an IPO of 48,500,000 equity shares of Rs 10 each through an offer for sale at a price to be decided through a 100 per cent book-building process.
Its four sponsors and the selling shareholders are the State Bank of India, Life Insurance Corporation of India, Punjab National Bank and Bank of Baroda (which are all controlled by the Government of India). UTI manages around 8.34 million accounts worth Rs 56,854 crore (around $14.2 billion) at end-December. "UTIAMC's IPO is the first IPO by a mutual fund or asset management company in India.
Other mutual funds are closely watching UTI's IPO," said an investment banker. Its equity shares are proposed to be listed on the National Stock Exchange of India Ltd and the Bombay Stock Exchange Ltd. Of the total net offer, not less than 50 per cent will be available for allocation on a proportionate basis to qualified institutional buyers, out of which 5 per cent will be available for allocation on a proportionate basis to mutual funds only.
Further, not less than 15 per cent of the offer will be available for allocation on a proportionate basis to non-institutional bidders and not less than 35 per cent of the offer will be available for allocation on a proportionate basis to retail individual bidders. The company and its predecessor, the Unit Trust of India have been active in the asset management industry in India for more than 40 years, after having established the first mutual fund in India.
It has a national footprint with representatives in 455 of India's 604 districts, with an extensive network of 79 UTI Financial Centres, independent financial advisers, banks and other distributors, as well as offices overseas. UTI also provides portfolio management services to approximately 320 clients. It has been recently selected as one of three asset managers to provide portfolio management services to the National Investment Fund. In addition, it has been selected by the Pension Fund Regulatory Development Authority as one of three asset managers to manage funds under a new pension scheme of the Government of India.
It manages offshore and foreign institutional investor funds (including a co-branded fund with Shinsei Bank of Japan) as well as venture capital and private equity funds. As of September 30, 2007, its portfolio management, overseas, venture capital and private equity funds had total assets of Rs 4,539 crore ($1.25 billion).
© Oman Daily Observer 2008
