The Tata Group is reportedly setting up to launch a fresh bid to acquire a majority stake in UTI Asset Management Company.
What Happened? Four state-owned financial entities, Punjab National Bank, Life Insurance Corporation of India, State Bank of India, and Bank of Baroda, are set to divest their stakes in UTI AMC, sources told the Economic Times.
Merchant bankers have been appointed by these entities to initiate the sale process, signaling an upcoming opportunity for potential investors in the asset management industry.
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Previous late-stage discussions between the Tata Group and the four state-owned entities for a majority stake in the business had faltered due to the insistence on a formal bidding process by a large investor in the AMC.
The Tata Group reportedly remains keen on acquiring the 45% stake held by the financial institutions in UTI AMC, aiming to expand its presence in the asset management sector and leverage its strong financial capabilities.
UTI AMC was established in 2003 through the reorganisation of the Unit Trust of India and has sponsors instead of traditional promoters. T Rowe Price Group Inc, a major investor in the AMC, holds a significant stake through its subsidiary, T Rowe Price International.
With assets under management valued at ₹2.39 lakh crore as of March 31, 2023, UTI AMC has positioned itself as a key player in the market. The company went public in October 2020, garnering a market capitalisation of ₹8,800 crore.
To comply with the Securities and Exchange Board of India’s (SEBI) cross-holding norms, LIC, SBI, and Bank of Baroda were directed by SEBI in December 2019 to lower their stakes in UTI AMC. By the time of UTI’s IPO in October 2020, these three financial institutions had successfully reduced their stakes below 10%, aligning with regulatory requirements.
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