UTI Asset Management Company is available at more than 20 percent premium over its issue price in the grey market ahead of its initial public offering which opens next week.
The current premium is in the range of Rs 130-145 per share, sources familiar with the development told Moneycontrol. This equates to a premium of about 23-26 percent over the upper price band of Rs 554.
The much-awaited IPO will open for subscription on September 29 and close on October 1 at a price band of Rs 552-554 per share.
The anchor book will open for a day on September 28 and the listing of shares is expected to be on October 12.
Jaikishan Parmar of Angel Broking believes the UTI AMC IPO will garner the interest from all market participants as IPO is priced at an attractive valuation.
"UTI AMC is demanding a valuation of 25x of FY20 earning and 5.3 percent of Q1FY21 QAAUM (quarterly average assets under management). However, listed peers HDFC AMC trades at 35x FY20 earnings and Nippon AMC trades at 37x FY20 earnings. Additionally, HDFC and Nippon AMC trade at 12.56 percent and 8.55 percent of Q1 FY21 QAAUM, respectively. Hence, considering attractive valuation and asset-light business model, we believe IPO will sail through successfully," Parmar explained.
UTI AMC is the second-largest asset management company in India in terms of total asset under management (AUM) and the eighth-largest in terms of mutual fund QAAUM, according to CRISIL.
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The IPO consists of an offer for sale of up to 3,89,87,081 equity shares by State Bank of India, LIC, Bank of Baroda, Punjab National Bank and T Rowe Price International (TRP).
SBI, LIC and Bank of Baroda are going to sell up to 1,04,59,949 equity shares each (i.e. 8.25 percent of the pre-offer total paid-up equity) via IPO, while PNB and TRP will divest up to 38,03,617 equity shares each (i.e. 2.99 percent of the pre-offer total paid-up equity).
Baltimore-based investment management firm TRP held 26 percent in UTI AMC, while SBI, Bank of Baroda, LIC and PNB have 18.24 percent stake each as on September 18, the date of filing red herring prospectus.
After the public issue, PNB's shareholding will reduce to 15.24 percent and TRP's to 23 percent. SBI, LIC and Bank of Baroda will hold about 9.99 percent, each, post-issue.
The offer includes a reservation of up to 2 lakh equity shares for eligible employees. The offer would constitute at least 30.75 percent of the post-offer paid-up equity share capital of the company.
The company aims to raise Rs 2,159.88 crore via IPO and all the money will go to above-mentioned shareholders.
Bids can be made for a minimum of 27 equity shares and in multiples of 27 equity shares thereafter.
Equity shares after IPO subscription will list on the BSE and National Stock Exchange of India.
The book running lead managers appointed for the issue are Kotak Mahindra Capital Company, Axis Capital, Citigroup Global Markets India, DSP Merrill Lynch, ICICI Securities, JM Financial and SBI Capital Markets.