Investment bankers say typically Sebi approves initial public offering (IPO) documents in 45-60 days, but the process could get delayed if the regulator raises queries.
The absence of a permanent CEO at such a large fund house may have been one of the concerns for Sebi, say industry sources. The fund house had average assets under management of Rs 1.5 trillion in the March quarter.
“This move will provide comfort to unit holders. We have a lot of examples in the MF industry to suggest that top management continuity is important for growth of the business,” said Amit Bivalkar, director at Sapient Wealth.
UTI MF’s asset base for domestic business has compounded annually at 3.54 per cent between 2017 and 2020 (comparing quarterly average assets for the March quarter). In the same period, the MF industry’s domestic asset base has compounded annually at 13.88 per cent.
After U K Sinha left the chairman and managing director’s position in 2011, the fund house had no chief for two years till Leo Puri was appointed. Differences between the PSU bank shareholders and the sole foreign shareholder, T Rowe Price, led to hurdles in Puri’s appointment and also delayed the listing plan.
The IPO is an offer for sale of 38 million shares by State Bank of India, Bank of Baroda, Life Insurance Corporation of India, Punjab National Bank (PNB), and T Rowe Price. Barring T Rowe Price and PNB, the others are selling their stake to comply with Sebi’s cross-holding norms, which require them to have less than 10 per cent stake in the fund house.
According to the offer document, Sebi had been probing some investments made by India Debt Opportunities Fund (IDOF) — a scheme managed by UTI International.
Show-cause notices by Sebi allege that IDOF is not a domestic MF scheme under Sebi regulations, and investments made by the fund were in contravention of FPI regulations. Investments in government securities were allegedly made without sticking to debt limits, in breach of norms, allegedly causing notional loss of Rs 244.34 crore to the government.