As per information sourced from Economic Times, UTI AMC got the approval from SEBI to bring 3000 cr IPO. The approval of the IPO was pending for long due to some observation found by SEBI in the DRHP.
State Bank of India, LIC, Bank of Baroda, and PNB hold 18.24% shares each and T Rowe Price holds 26% as on 31.03.2019, in UTI AMC.
As of 31.07.2019, the total AUM of UTI AMC was 1.60 Lakh Cr.
The IPO will be total OFS wherein, State Bank of India (SBI), Life Insurance Corporation (LIC), and Bank of Baroda are offering to sell 1,04,59,949 shares each, while Punjab National Bank (PNB) and T Rowe Price International are planning to offload 38,03,617 shares each.
Why is UTI AMC bringing IPO?
If you see the business model of AMC, they actually don’t require much money to run their day to day operation unlike any other company. So why they are coming with an IPO. The answer is the regulatory issue.
As per SEBI regulation, the SBI, LIC, BOB, and PNB all run their mutual fund businesses. If any entity is running a mutual fund business, then it can’t have more than 10% holding in any other mutual fund company. UTI AMC being a mutual fund company in itself, so all these stakeholders have to reduce their holding.
Current UTI AMC Valuation in Unlisted Market
The current market price of UTI AMC is 975 in the unlisted market. At this price, the valuation is around ~12360 cr. This looks fully priced in as compare to listed players like HDFC AMC or Nippon AMC.