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Thursday, April 26, 2007

Sponsors to sell 50% of UTI AMC

The four state-owned sponsors of UTI Asset Management Company (AMC) will offer 50% of their holdings for sale, paving the way for a public listing of one of the largest fund houses in the country.

The planned listing will mark the first by a local fund house which now manages assets worth Rs 36,000 crore. Globally, investment management firms such as Franklin are listed on the New York Stock Exchange.

State Bank of India, Life Insurance Corporation of India, Punjab National Bank and Bank of Baroda are the four sponsors of the AMC which was formed in 2003 after UTI, the country’s first mutual fund, was split into two. All the four control 25% each of the Rs 10-crore paid-up capital of the asset management firm.

The net asset value (NAV)-based schemes were transferred to UTI AMC then as part of a restructuring of the mutual fund in the wake of a crisis. The four sponsors paid the government close Rs 1200 crore after a valuation exercise in 2005.

The listing will provide them with an opportunity to realise good value by selling just 50% of their original holdings.
The board of directors of the AMC on Tuesday approved the proposal for an offer for sale by the sponsors and the plans for listing after securing all approvals, according to a bank official privy to the decision.

The government has also been sounded out on the proposal, he said. UTI AMC also plans to issue ESOPs to its staffers. A plan to list UTI as a holding company was also mooted in the past.

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