The sources said UTI MF will hold a meeting of the stakeholders soon to finalise the structure of the issue. An email sent to UTI MF remained unanswered.
The long-awaited IPO could help partly address the cross-shareholding tangle of LIC, SBI, and BoB. As the three entities have separate fund houses, their stakes in UTI MF have to be lowered to below 10 per cent to comply with Sebi norms. PNB recently exited from Principal PNB MF; while PNB is not required to sell its stake in UTI MF, it is keen to raise capital to support its core banking business, said people in the know.
UTI MF’s IPO will be underpinned by a rally in shares of asset managers. Shares of bigger peers HDFC MF and Nippon India MF (formerly Reliance MF) have rallied 150 per cent and 140 per cent, respectively, this year. In comparison, the benchmark Sensex has gained 12.5 per cent.
Investment bankers say if UTI MF’s valuation is pegged to that of Nippon MF, it could fetch valuation of even Rs 12,000 crore. UTI MF has assets under management (AUM) worth Rs 1.54 trillion, while HDFC MF and Nippon MF manage Rs 3.8 trillion and Rs 2 trillion respectively, data provided by industry body Amfi shows.
HDFC MF has a market cap of Rs 80,000 crore, while Nippon MF is valued at Rs 23,300 crore.
Despite the turmoil in the financial space, investors have latched on to the shares of asset managers on the industry’s growth prospects.
“The domestic MF industry has several structural factors in place which will lead to its multi-year growth. The AUM as a share of GDP (11 per cent) remains significantly lower than the world average (62 per cent). While Indian household savings as a percentage of GDP have declined over the recent past, RBI data indicate that households are moving higher shares of their savings to financial assets. This provides scope for strong future industry AUM growth,” wrote Centrum in a recent note.