UTI Securities sale by mid-Feb

Acquirer allowed to use brand name for two years.

The Administrator of the Specified Undertaking of Unit Trust of India (ASUUTI) has set a mid-February deadline for divesting its stake in UTI Securities.

Sources close to ASUUTI said the acquirer would be allowed to use the UTI brand name for two years instead of six months as decided earlier.

The companies, which had expressed interest to acquire UTI Securiries, would be handed over the bid documents by January 17 and they would submit the financial and technical bids by January 30, sources added. "We hope to conclude the sell off by mid-February," they said.

Reliance Capital, Bank of Baroda, Standard Chartered Bank and UTI Bank had evinced interest in the sale. ASUUTI plans to sell stake in a handful of companies "" NSE, NSDL, Care, Icra, OTCEI, Stock Holding Corporation of India and North Eastern Development Corporation "" by end of 2005-06. No timeframe has, however, been fixed for offloading its stake in Larsen & Toubro, UTI Bank and ITC.

Analysts said the ASUUTI decision that the acquirer would be eligible to use the brand name of UTI Securities for two years was aimed at achieving better valuation.

"UTI has a strong brand value. In addition, the new owner of the company needs some time to launch its own brand," they added.

The acquirer will have a foothold in major cities through the UTI Securities' network of 20 branches and 150 franchisees.

Incorporated in 1994 as an institutional brokerage house, UTI Securities offers services in equity, debt markets, mutual funds and insurance products. It is also into portfolio management and depository services.

Engaged in primary dealership and government securities, the company has recently started commodity trading through its subsidiary UTISEC Commodities on NCDEX and MCX.

ASUUTI has been running UTI Securities as an independent professional entity for providing financial intermediary and intermediary services to its corporate and retail clientele. ICICI Securities (I-Sec) is the investment banker for the selloff.

Alongside, ASUUTI has been trying to sell off its equity holding in about 300-odd companies, most of which are unlisted. It had recently sold its stake in Adani Port and IL&FS.

A source close to development said ASUUTI would prefer to sell its stake in NSE, NSDL, CARE, Stock Holding Corporation of India, North Eastern Development to public sector undertakings.

"It has set an internal target of cashing in all these investments by March. However, there will not be any problem if it cannot sell all them by March 31," sources said.

The UTI bonds are due for redemption in 2008 and 2009 and there is no direct line between the redemption of bonds and the sale of its stake in various companies as the government has assured the return on these bonds.

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ON THE BLOCK

THE BID documents would be handed over by January 17 and the bidders would submit the financial and technical bids by January 30

ASUUTI plans to sell stake in companies including NSE, NSDL, Care, Icra, OTCEL, Stock Holding Corporation of India and North Eastern Development Corporation