Global firms eye stake in UTI

UTI Asset Management Co, with a corpus of Rs 450 billion ($11.4 billion) at the end of September, aims to sell 20 per cent of the firm before the IPO, the first by an Indian asset manager.

“We are going to issue 10 million additional shares through private placement,” Chairman UK Sinha told media in an interview. He said companies from the United States, Europe, Australia, Southeast Asia and the Middle East had approached the fund house for the pre-IPO placement.

No company will be offered more than 5 per cent, he said. Sinha said UTI would appoint bankers for the IPO in the first week of November, but did not say how much he expected to raise.

“We had presentations from 12 investment bankers, the best in the world,” he said. “They have been talking of an amount where the multiples of the exiting investors would be very, very high.” He did not elaborate, but said the private placement and the IPO would be done in quick succession. State Bank of India, Bank of Baroda, Punjab National Bank and Life Insurance Corporation of India, all government-run, hold 25 per cent each of UTI's 50 million shares.

After the IPO, in which 19.4 million shares would be sold by existing shareholders, their combined stake would fall to 51 per cent. India's rapidly growing 4.8-trillion-rupee domestic fund industry, led by Reliance Capital and ICICI Prudential, has attracted many global firms, with a booming economy boosting incomes and appetite for investments.

This month, Pioneer Global Investments Ltd, the fund arm of Italy's biggest bank UniCredit, joined hands with Bank of Baroda to re-enter the Indian fund industry after nearly five years. The investment arms of top insurer American International Group Inc and JPMorgan started their Indian fund businesses this year, while Morgan Stanley is planning to expand its India fund operations after a gap of 13 years.