Indian IPO

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Friday, November 09, 2007

UTI MF plans IPO by mid-Feb

UTI Mutual Fund is planning to float its initial public offer by mid-February, Chairman and Managing Director U.K. Sinha said today.

"We have time to complete the entire process by Mar 31, but are hoping to come out with the IPO by first-half of February," he told Newswire18.

The fund house has finalised seven investment managers for the proposed IPO, he said.

JM Financial, Enam Securities and Citibank are the global co-ordinators, while UBS, Goldman Sachs, ICICI Securities and SBI Securities will act as the lead book-running managers.

Tuesday, NewsWire18 had reported that the fund house would decide on the timing of its proposed initial public offer and finalise the merchant bankers on Wednesday.

Sinha also said the public offer's valuation is still being worked upon. Last month, the fund house had said it would be filing draft offer documents for the IPO by December and would also sell 20% stake to a private player well before the issue.

UTI Mutual Fund will be the country's first mutual fund to be listed on a stock exchange. In October, assets under management of the third largest fund house stood at Rs 517.53 billion, up 15% from a month ago.

CNBC-TV18 has learnt that India's third largest mutual fund – UTI, is looking to raise nearly USD 1.5 billion dollars through its forthcoming IPO. There is reason for SBI, Bank of Baroda, LIC and PNB to celebrate.

Investors will soon be able to trade UTI, without investing in its funds. UTI mutual funds is all set to be India's first listed asset management company. It has roped in seven investment bankers - Citi, JM Financial, Enam, UBS, Goldman Sachs, SBI Capital and ICICI Securities. It is a two-part process.

First, UTI will raise funds through a pre-IPO placement, which will expand its equity by 20%. But no single investor will hold more than 5%.

The pre-IPO placement will help UTI raise about Rs 2,000-3,000 crore, which will be used for expansion plans.

"We are now going to raise a third fund. For that, we need seed capital and for that, we need money. We are also going to float an infrastructure PE fund of USD 500 million, for which we are looking for partners. But we need money for that. We are also planning branch expansion,” said U K Sinha, CMD, UTI MF.

By March ’08, UTI plans to double its branches to 150 and raise this to 300 branches over the next year.

That private placement will bring down the shareholding of its promoter PSUs - SBI, LIC, BOB and PNB, from the current 25% to 20% each. After which, each of these PSUs will dilute another 7.25% each, or 29% in all, for a total Rs 5,000- 6,000 crore. That means a tenfold return for these players. They will pocket Rs 1,250 crore for stake that was recently valued at Rs 156 crore. And all this money is expected to come to these investors over the next three months.

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