More inquiries for unlisted shares of UTI MF as IPO nod comes through

The increase in percentage terms though, has been in single-digit since the markets have been volatile.
Dealers in unlisted shares have seen a rise in the number of calls for trades in UTI Asset Management Company. The asset manager has just received regulatory clearance to list on the bourses.

Interest in the stock has picked up in anticipation of the IPO but there is an air of caution because of the current market conditions, said dealers in the unlisted space. A Kolkata-based dealer said the share price has headed north. The hike in percentage terms, though, has been in single digits as the markets have been volatile. Firms have been cautious about proceeding with their IPOs due to the pandemic and resulting market volatility.  

According to a dealer in Mumbai, buyers are unwilling to pay a premium for the shares. 
Two listed asset managers Nippon Life India Asset Management (up 8.8 per cent on Tuesday) and HDFC Asset Management Company (up 2.2 per cent) have given returns broadly in line with the Nifty, during 2020. This is despite the MF industry’s troubles with the fixed income segment. 

Dhirendra Kumar, CEO of Value Research, said UTI has been affected by ownership issues. The MF lists four government shareholders, including SBI, LIC, PNB and Bank of Baroda. Global asset manager T. Rowe Price Group also holds a stake. Making UTI a listed company may help address ownership issues, though it will need work, according to him. 


The company reportedly plans to sell shares worth Rs 3,000 crore. The regulatory documents show shares were previously allotted to employees. Employees often sell shares in unlisted firms, ahead of an IPO. 
Analysts expect well-known firms to consolidate their position during bad times. A research by PhillipCapital on June 16 stated that the market share of the top 10 players had risen to 57 per cent, up six percentage points over the last decade.

“As players with strong brand equity and recall tend to gain market share in tough times, consolidation of assets within the top few players will continue,”  said the report by research analysts Sujal Kumar and Manish Agarwalla.

The MF sector’s AUM is likely to increase at 13 per cent every year, between FY20 and FY23, according to Reliance Securities research analyst Binod Modi and senior research associate D Vijiya Rao.

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