The asset management company (AMC) and trustee board have proposed it be listed and sought approval from the government. Since the shareholders (four government financial institutions have the majority; there are private minority shareholders) have not been able to reach a consensus, this matter is awaiting approval from the ministry of finance. As soon as we get that approval, we will be well positioned to undertake steps towards listing within six months or so. That’s the view of UTI AMC.
Any communication from the government?
None from the ministry. Essentially, there has been a discussion between the ministry and the shareholders. I think we should be very close to resolution and are anticipating some communication shortly.
What makes you hopeful?
From our perspective, the logic of an IPO has always been very strong. It is a method by which all the shareholders will get price discovery and a very fair exit. It will be well rewarding. Second, it will allow UTI to become a board-governed, independent, listed entity, the right business model for an asset manager — not a subsidiary of a bank or a corporate. Third, it will ensure a unique institution such as UTI, with 10 million folio holders and the largest reach in terms of number of investors, can continue to play an important role in capital market development.
Finally, it will also represent commitment to continued economic reform, in terms of development of both institutions and markets, a posture the government has sought to take. We do not see any other alternative which can make that much sense.
Are Sebi (the capital markets regulator) and other shareholders kept in the loop?
Another benefit of an IPO is that it resolves the regulatory issue. The Securities and Exchange Board of India (Sebi) has always wanted to resolve the conflict of interest. An IPO will help us resolve that, as it will provide an exit to shareholders with their own AMCs. It is an uncomfortable situation for us.
How will the shareholding look after the proposed IPO?
That decision will be taken by the shareholders. It is not for us to tell them they should sell. We have to take into account the regulatory issue and conflict of interest. So, the IPO will be a minimum 26 per cent (of total equity); beyond that, it will be up to the shareholders. The proportion of shares to be offloaded will be decided once we obtain the IPO approval.
Is there still disagreement between UTI AMC shareholders?
Based on what I’ve read in the press, that appears to be the case. Ultimately, we have to find a way of resolving these. As explained, we don’t see any other feasible proposal.
Is six months enough to get all stakeholders on the same page?
Six months is from the time of getting approval. We are hopeful the approval will come soon. The delay is harmful for UTI MF, an institution created for the benefit of our financial system and market. I am sure this will spur us to a quick resolution as opposed to a further delay, given the downsides.
So, are you hopeful the IPO will take place in 2016?
I certainly hope so but the decision is not ours.