As the finance ministry seeks to assert itself in the affairs of UTI Asset Management, the company’s foreign partner might see its influence curtailed in the days to come.
T Rowe Price, the US asset manager which holds 26 per cent in UTI Asset Management, may lose one of its two board seats in the restructured board, according to two people familiar with the development.
“T Rowe may be asked to withdraw its current directors and nominate a fresh candidate to the board. The government shareholders are also likely to get their nominees in the board bringing them on par with T Rowe,” said one of the people, who is an official at one of the government shareholders.
Independent directors Anita Ramachandran and Prithvi Haldea have already resigned citing personal reasons from the board.
After the resignations, the board has five members including two representatives from T Rowe Price — James Sellers Riepe and Flemming Madsen. P R Khanna, Pradeep Gupta and Sachit Jain are the remaining independent directors.
The finance ministry has been pushing the candidature of Jitesh Khosla, a civil servant, for the post of chairman and managing director. However, the present board, populated by nominees of foreign shareholders and independent directors, is in favour of an industry professional.
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The government shareholders — State Bank of India, the Life Insurance Corporation of India, Punjab National Bank and the Bank of Baroda — who hold 18.5 per cent each do not have a board representation. However, they are acting in concert and control 74 per cent of the company at the behest of the state.
The latest move is part of the efforts by the shareholders to reconstitute the fund house’s board after the nine-month-long tug-of-war over the appointment of a new chief after the previous incumbent, U K Sinha, vacated the post on being selected as Sebi chairman.
Last week, Business Standard had reported that the UTI AMC board may be restructured with some independent directors giving way to nominees of government shareholders.
According to people familiar with the developments, the four public sector shareholders, who control 74 per cent of the company between them, have given feelers to some independent directors asking for their resignations. “T Rowe is not too happy about the recent events. They might be on the way out,” said another official, suggesting that the Baltimore-based asset manager could be weighing exit options.
Sarah Cadden, spokesperson for T Rowe Price, said, “At this time, we have no comments for inclusion in your article” in response to an email seeking comments.
Dhirendra Kumar, CEO, Valueresearch, said the government has been conducting affairs of UTI in an ad hoc manner. “The government doesn’t seem to be worried about the future of UTI as a business entity. Nor does it seem to be bothered about the interests of the shareholders,” he added.