The Hindu Business Line : UTI chief moots IPO

UNIT Trust of India may soon become the first public-owned asset manager in the country. UTI Asset Management Company (P) Ltd or UTI AMC could go for a public issue of equity should any or all of its sponsors wish to exit, Mr M. Damodaran, Chairman and Managing Director of the AMC, said here today.

This proposal is mooted to enable existing shareholders of the asset management company to divest their stakes in the company. "We may not need fresh capital but if some of the sponsors want to divest their stakes in the AMC then an offer of sale through this route would prove effective. Details of the same will be announced later, Mr Damodaran said.

Speaking on `The New face of UTI' at the Indian Merchants' Chamber here, Mr Damodaran said, "it is certainly our intention to return to the people the mutual fund that is theirs... it is basically a timing issue... we want to give the ownership of UTI back to the people."

Sponsored by State Bank of India, Punjab National Bank, Bank of Baroda and Life Insurance Corporation, UTI AMC manages about Rs 16,500 crore of assets under 29 different funds offering various equity, debt and combination plans. UTI Mutual Fund, carved out of the erstwhile Unit Trust of India, is the country's largest mutual fund both in terms of assets under management as well as number of investors, which currently is more than one crore.

Globally, shares of some asset management companies such as Franklin Templeton are widely owned by the public and intensely traded on stock exchanges. Mr A.P. Kurian, Chairman of the Association of Mutual Funds of India, told Business Line it would be a welcome development if UTI AMC were to go public. Mr Kurian, however, said it might require certain changes in regulations regarding sponsors.

Mr Pradip Shah, Chairman, IndAsia Fund Advisors Pvt Ltd, said a publicly traded AMC would offer an investment choice to individual investors. An IPO would give the AMC an opportunity to expand and consolidate. The capital raised could be used for acquisitions, Mr Shah said.

On a quick reckoning, with about Rs 16,500 crore in assets under management UTI could be earning a profit of about Rs 30-40 crore on an income of roughly Rs 200 crore. With those kinds of numbers, a UTI share would be quite attractive to investors.

Plans to launch offshore fund

MR A.K. Sridhar, President and Chief Investment Officer, UTI AMC, said UTI might soon launch an offshore fund, targeting non-resident Indians and foreign investors, which would offer capital protection to investors. He, however, declined to give details.

Mr Sridhar said UTI would launch five or six plans in the next two to three months. He said the plans would include an Infrastructure Fund, a Fund of Funds and a Floating Rate Fund. UTI would also enter pension funds management at a later stage, he added.

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