Tata Mutual Fund has initiated talks with public sector banks to increase its stake in UTI Asset Management Company in a bid to grow its business faster as new entrants in the field have posed a stiff challenge to legacy players.
Tata MF currently owns a 2.62 per cent stake in UTI AMC. As of the June quarter, UTI AMC has an average asset under management of ₹2.24-lakh crore while Tata MF has ₹88,367 crore. One of the early investors in UTI AMC, the global investment management company T. Rowe Price is currently the largest shareholder with a 22.97 per cent stake as of the June quarter.
As UTI AMC went public in 2020, Bank of Baroda and State Bank of India, which owned about 18 percent in it, bought it down to 9.98 per cent. LIC also diluted its holding to 9.98 per cent in the IPO. Each of the three sponsors offered an 8.25 per cent stake in UTI AMC during the IPO.
The Securities and Exchange Board of India (SEBI) has directed sponsors who had their mutual funds to reduce their stake in UTI. As per SEBI norms, a sponsor of a mutual fund, its associate or group company including the asset management company of the fund, cannot have 10 per cent or more shareholding or voting rights in the asset management company or the trustee company of any other mutual fund.
The two public sector banks except PNB and LIC have their own asset management business. PNB exited the business and now holds 14.99 per cent in one of the oldest AMC. Other mutual funds that own a stake in UTI AMC include Mirae MF (4.65 per cent), Invesco MF (1.81 per cent), ICICI Prudential MF (1.47 per cent) and HDFC MF (1.14 per cent).
August 16, 2022