UTI AMC, the largest asset management company in India in terms of total asset under management (AUM), has filed draft red herring prospectus (DRHP) with the capital market regulator SEBI on December 19.
The IPO of 38,987,081 equity shares comprises an offer for sale by five selling shareholders -- State Bank Of India (10,459,949 equity shares), Life Insurance Corporation Of India (10,459,949 shares), Bank Of Baroda (10,459,949 shares), Punjab National Bank (38,03,617 shares) and T Rowe Price International (38,03,617 shares).
Merchant banker sources told Moneycontrol that the issue size could be little over Rs 3,000 crore as these shareholders have been asking for a total valuation of Rs 10,000 crore for UTI AMC.
This offer includes a reservation of up to 200,000 equity shares for purchase by eligible employees, as per the offer document.
The offer would constitute at least 30.75 percent of the post-offer paid-up equity share capital.
Earlier this month, country's largest lender State Bank of India had said it would sell its 8.25 percent stake in UTI AMC through an initial public offering.
SBI, LIC, Punjab National Bank and Bank of Baroda each hold 18.5 percent stake in the UTI AMC. The remaining stake is held by US company T Rowe Price.
The stake sale by most selling shareholders is in line with the cross-holding limit rules introduced by the SEBI in March 2018, which says if a shareholder has at least 10 percent stake in a mutual fund house, then it cannot hold a similar-sized stake in another fund house and would also have to give up its board positions.
UTI AMC is the seventh-largest asset management company in India in terms of mutual fund QAAUM as of September 30, 2019, according to CRISIL. It manages 178 domestic mutual fund schemes, comprising equity, hybrid, income, liquid and money market funds as of September 2019.
As of September 2019, its total QAAUM for domestic mutual funds was Rs 1,54,230 crore, while the other AUM was Rs 6,25,470 crore.
Consolidated profit of the company grew by 53.8 percent year-on-year to Rs 209 crore in six months period ended September 2019 due to lower other expenses and tax cost, but revenue in the same period fell by 6.5 percent to Rs 474 crore YoY.
The objects of the offer are to achieve the benefits of listing the equity shares on the stock exchanges and hence, the company will not receive money from the public issue.
The equity shares will be listed on BSE and NSE. Kotak Mahindra Capital Company, Axis Capital, Citigroup Global Markets India, DSP Merrill Lynch, ICICI Securities, JM Financial and SBI Capital Markets are the book running lead managers to the offer.
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