US-based investment firm T Rowe Price, largest stakeholder in UTI Mutual Fund, today said it is disappointed from the Indian shareholders for not taking steps to bring down their stakes to 10 per cent in order to comply with Sebi's directive.
It also said that the board was not working towards leadership continuity at UTI.
T Rowe Price, which has been pitching hard for the initial public offering of UTI Asset Management Company (AMC), holds 26 per cent stake in the fund house.
"We are disappointed that the board is not taking action to ensure continuity of leadership at UTI and that the Indian shareholders are not taking steps to comply with Sebi's 10 per cent rule," T Rowe Price spokesperson said in an email response.
"Having strong governance and management in place, it is essential to protecting the interests of UTI AMC and its stakeholders, including the millions of Fund unit-holders. It will also put the company in the best position to move forward with the planned IPO," he added.
Further, the US-based investment company said that Leo Puri has done a stellar job managing UTI since being appointed as managing director in 2013 and "we are very supportive of having him continue in this role".
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Puri was appointed in 2013 after the position was unoccupied for over two years, after U K Sinha left UTI AMC to join the Sebi as its chairman.
Puri, in his career spanning over 30 years, has worked as director and senior adviser with McKinsey & Company and also as managing director with private equity firm Warburg Pincus.
When asked about UTI AMC's board not working towards leadership continuity, a spokesperson of the fund house declined to comment.
Sebi has capped the cross-shareholding in mutual funds to 10 per cent to avoid "potential conflict of interest" and strengthen the "governance structure" of mutual funds.
As per the regulator, sponsor of a mutual fund, its associates, group company and its asset management company will be restricted from holding 10 per cent or more stake in a rival AMC. Such entities will be barred from having a representation on the board of another mutual fund house.
UTI AMC, which has been planning an IPO for a long time, could become the third fund house to be listed in the country.
So far Reliance AMC is the only listed company, while HDFC AMC had filed filed draft papers with Sebi.
Earlier, UTI AMC had filed draft papers with the Securities and Exchange Board of India (Sebi) in 2008 but could not hit the capital markets.
UTI MF has an assets base of Rs 1.55 lakh crore and is the sixth-largest in terms of assets under management behind ICICI Prudential AMC, HDFC AMC, Reliance Nippon Life AMC, Birla Sun Life AMC and SBI MF.
The fund house's public issue may allow partial exit for four sponsors -- State Bank of India, Life Insurance Corporation of India, Bank of Baroda and Punjab National Bank -- which own 18.24 per cent each in it, while the remaining 26 per cent is held by the T Rowe Price.