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The long running saga over the appointment of a permanent head at UTI Mutual Fund finally came to an end on Wednesday, with Leo Puri being selected as the managing director. The shareholders of UTI, in an extraordinary general meeting in Mumbai on Wednesday, approved the appointment of Puri, a senior advisor to McKinsey & Co, as the fund’s head. UTI, however, has split the position of chairman and managing director (CMD) for the first time ever.
Earlier, Puri was selected for the CMD’s post, but differences among shareholders over the profile of UTI’s head led to splitting of the roles. SBI, Punjab National Bank, Bank of Baroda and the Life Insurance Corporation of India (LIC) hold 18.5 percent each in UTI, while US investment manager T Rowe Price owns 26 per cent. Sources said T Rowe Price was instrumental in roping in Puri.
The CMD’s position has been lying vacant since February 2011 after U K Sinha moved on to head the Securities and Exchange Board of India (Sebi). Earlier attempts at appointing a head for the fund house failed due to differences among shareholders. A proposal to put in place Jitesh Khosla, a senior bureaucrat, was also shelved after opposition from T Rowe Price that wanted a professional with experience in the financial services space. Khosla is also the brother of Omita Paul, secretary to Indian President Pranab Mukherjee.
More recently, shareholders rejected Puri’s candidature after he was short-listed, citing lack of qualifications as mentioned in the advertisement. Puri has a dual Masters degree from Oxford and Cambridge, while the job advertisement required UTI’s CMD to have a management degree or chartered accountant. The requirement was revised later.
After the split of the CMD post, the chairman’s post is likely to be taken up by a veteran public sector official in a non-executive role.
Industry officials said the prolonged search for the UTI Mutual chief could have been avoided. “It took them 28 months?! There have been times when India had three-four Prime Ministers in that period,” was the sharp reaction of the CEO of a rival mutual fund when he heard the news.
He was referring to the phase when Rajiv Gandhi, Chandra Shekhar, V P Singh and P V Narasimha Rao all occupied the top posts between December 1989 and June 1991 - an 18-month period around the time of liberalisation when foreign investment first began to flow to India.
UTI’s growth has been lagging the industry since Sinha moved on. Its assets have grown 11.18 per cent from Rs 67,188 crore to Rs 74,706 crore in the March 2011 quarter when Sinha joined Sebi.
The industry, meanwhile, has grown 20.8 per cent -- from Rs 7 lakh crore to Rs 8.46 lakh crore.
UTI GETS A NEW MANAGING DIRECTOR
- Shareholders approve Leo Puri as MD
- Decision taken at EGM on Wednesday
- Separate chairman post likely to be filled by a public sector veteran, say sources
- UTI has been headless since U K Sinha left for Sebi in February 2011
- AUM growth has trailed industry in the period
