UTI Bank likely to float MF

Private sector UTI Bank, in its new avatar as Axis Bank, is likely to enter into asset management, private equity and venture capital businesses as its new name puts to rest the objection raised by UTI Mutual Fund over the use of UTI brandname.

"We don't have a problem with the bank using any other name, except UTI," a UTI Mutual Fund official said.

Under an agreement signed with the government at the time of separation of the erswhile Unit Trust of India to UTI-1 (the Specified Undertaking of UTI) and UTI-2 (the current UTI Mutual Fund), all entities using the UTI brandname had to give royalty to UTI Mutual from April 2008. The royalty amount was to be determined later.

Earlier, executives of UTI Mutual Fund, had told Business Standard, had raised reservations over the bank's plan to float private equity and venture capital funds as the mutual fund was already into private equity business through UTI Ventures.

Sources said UTI Bank was serious about foraying into mutual funds through its arm, UBL Asset Management, but possible opposition from UTI Mutual Fund forced it to delay the plan.

Alok Gupta, CEO of UBL Asset Management claimed that there was no brand confusion as far as its entry into private equity and venture business was concerned. On whether the bank was also getting into mutual fund business, Gupta said no decision was taken as yet.

The bank will, however, launch its private equity and venture capital funds this fiscal itself.

The private equity fund, which will raise funds from domestic and overseas investors, would invest in infrastructure sector.

The banking and mutual fund businesses in the country have witnessed spectacular growth over the last few years. Most of the top global financial houses are looking forward to start their India operations by way of entering one of these businesses.

Mutual fund is seen as a potential growth investment given the stability in the equity markets since the last three years.

UTI Bank, the third largest private sector bank, will rely on its 550 retail branches to boost its mutual fund business. Established players such as ICICI Bank and Kotak Mahindra have already entered the AMC business, while others such as IDBI are looking at a similar foray.