Mumbai, Aug. 13: The UTI Mutual Fund is considering an initial public offer — the first of its kind by any mutual fund in the country that could see an asset management company’s shares being traded on the stock exchanges.
“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,” M. Damodaran, the chairman of the mutual fund, said today.
While Damodaran dropped the bombshell, he remained elusive on the tentative date of such a public offering.
All that he would say is: “UTI Asset Management Company could go for a public issue of equity should any or all of its sponsors wish to exit.”
“We may not need fresh capital but if some of the sponsors wish to divest their stakes in the AMC then an offer of sale through this route would prove effective,” Damodaran, who is currently in the midst of steering the mutual fund through a major transformation, explained.
UTI Mutual Fund is sponsored by State Bank of India, Punjab National Bank, Bank of Baroda and Life Insurance Corporation.
The asset management company manages about Rs 16,500 crore under 29 different schemes 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 the number of investors, which currently is more than one crore.
In the overseas markets, many asset management companies have their shares listed on the stock exchanges.
For a mutual fund with an overall corpus of Rs 16,500 crore, UTI could be earning a profit of Rs 25-30 crore on an income of roughly Rs 200 crore.
Analysts say this healthy bottomline along with the brand equity that UTI enjoys in the market could make the proposed flotation very attractive.
According to them, the mutual fund is positioning itself to take on the role of a pension fund once the government liberalises the norms governing the sector.