UTI AMC, Punjab National Bank shares jump on the stake sale plans

Shares of UTI Asset Management Company (UTI AMC) jumped nearly 8 per cent, a day after state-owned Punjab National Bank (PNB) announced its plans to divest its holdings in the asset manager. Shares of PNB too finished more than 5 per cent higher.

In fact, shares of PNB hit a 21-month high of Rs 54.90 per share during intraday trade to end the day at Rs 54.55 per share on the BSE. The former ended Friday at Rs 743.5.

“The Bank has received approval of DIPAM, Ministry of Finance, Government of India for divestment of Bank's entire/part stake in UTI AMC in single or multiple tranches subject to compliance of Sebi Regulations/other applicable regulatory guidelines,” PNB said in a stock exchange filing on Thursday.

Currently, PNB holds a 15.22 per cent stake in UTI AMC. The stake is valued at around Rs 1,437 crore at UTI AMC’s last closing price of Rs 743.5.

UTI AMC is promoted by four public sector undertaking (PSU) sponsors, who collectively own 45.16 per cent. Bank of Baroda, State Bank of India and Life Insurance Corporation of India hold 9.98 per cent each, while PNB holds 15.22 per cent stake. US-based T. Rowe Price International holds another 22.97 per cent stake.

“The transaction will benefit PNB as it will help the lender improve its capital position. It will also help UTI AMC as it will help reduce the ‘PSU discount’,” said an analyst.

In recent months, there have been news reports that the Tata Group and Aditya Birla group are eyeing to pick stake in UTI AMC.

UTI AMC is the cheapest among listed fund houses in terms of their one year forward price to earnings (P/E) multiples.