“The regulator has sought certain clarifications and additional information from the AMC with respect to certain compliance- and violation-related matters. The investment bankers replied to the issues raised by
in mid-April. Currently, the matter is being examined by Sebi’s brass,” said a person privy to the development.
Replying to Business Standard
’s queries pertaining to Sebi
raising compliance issues and a possible delay in listing approval, a UTI AMC
spokesperson said: “We would like to inform you that we are not aware of any such development. We have no further comments at this stage.”
had filed the draft red herring prospectus (DRHP) for an IPO on December 18, 2019, following a truce between stakeholders over divestment of their holdings.
“Typically, Sebi approves IPO documents in 45-60 days, but the process can get delayed if the regulator raises queries,” said an investment banker.
Sebi is probing some investments of UTI’s India Debt Opportunities Fund (IDOF) — registered as foreign portfolio investor (FPI) — which may be in contravention of the overseas fund rule. Sources said Sebi had launched adjudication proceedings last year in the matter and also issued a show-cause notice to the fund house. The proceedings are yet to be concluded, said another source, hinting the outcome of the case would decide the fate of the IPO.
The matter has been disclosed by the fund house in its offer document. According to it, UTI’s IDOF was in contravention of the debt investment norms. The fund managed by UTI International was given licence of an FPI based on its investor base. The Sebi probe revealed the disclosures given by UTI to depositories were incorrect, and the fund did not fulfil the broad-based criteria.
“Investments by the debt fund through the IDOF Scheme in government securities were made without purchasing debt limits under the auction route, in contravention of circulars issued by Sebi and Sebi FPI regulations, allegedly causing a notional loss of Rs 244.34 million to the government of India,” UTI disclosed in a draft paper.
On the issue of compliance including the CEO position, sources in the know said Sebi is of the view that such a large fund house with so much public money requires a permanent head. At present, Imtaiyazur Rahman, chief financial officer of UTI AMC, has been appointed as the interim chief executive after Leo Puri’s contract ended in 2018. Puri had joined the fund house at a time when there was no CEO for two-and-a-half years, after his predecessor UK Sinha left the firm.
UTI AMC’s IPO is an offer for sale of 38 million shares by the State Bank of India (SBI), Bank of Baroda (BOB), Life Insurance Corporation of India (LIC), Punjab National Bank (PNB), and T Rowe Price. Barring T Rowe Price and PNB, the others are selling their stake to comply with Sebi norms, which require them to have less than 10 per cent stake in the fund house. BoB, SBI, and LIC will each sell 8.25 per cent stake, which will bring down their stake to 9.99 per cent.