KR Choksey's IPO report on UTI Asset Management Company
UTI Asset Management Company Limited (UTI) is a SEBI-registered asset management company; sponsored by State Bank of India (SBI), Punjab National Bank (PNB), Bank of Baroda (BOB) and Life Insurance Corporation of India (LIC). T. Rowe Price (TRP), a global Private equity, is other major shareholder of UTI with 26% stake. Incorporated in 2002, UTI AMC was established as the first MF in India and has operating history of 50+ years through its predecessor, Unit Trust of India. The ‘UTI’ brand enjoys a strong brand value, especially in B30 cities and proven track record in mutual fund industry with strong brand recognition. UTI is the second largest Asset Management Company (AMC) in India in terms of Total AUM and the eighth largest AMC in India in terms of mutual fund Quarterly Adjusted Asset Under Management (QAAUM) as of June 30, 2020. UTI AMC manages 150+ domestic mutual fund schemes, comprising equity, hybrid, income, liquid, and money market funds. As of June 30, 2020, the total QAAUM for domestic mutual funds was INR 133,630 Cr., while the Other AUM was INR 849,390 Cr. UTI offers PMS services and asset management services for government retirement funds like NPS and EPFO, overseas funds and AIFs. UTI has 4 subsidiaries namely UTI Retirement Solutions, UTI International, UTI Capital and UTI Venture Funds Management.
Valuation and Outlook
The IPO is an offer for sale of 38 mn shares by SBI, BOB, LIC, PNB and TRP. Barring TRP and PNB, the other sponsors are selling their stake to comply with SEBI’s cross-holding norms and hold less than 10% stake in UTI by December 2020, failing which, the regulator would freeze their excess voting rights. It is also worth to note the selling shareholders will be entitled to the entire proceeds of the offer net of expenses. UTI will not receive any proceeds from the Offer.
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