Nod for UTI Mutual IPO

UTI Mutual Fund, the country's leading fund house, has received board approval for its initial public offer (IPO), which is expected by the end of the financial year.

The AMC's IPO, the first by a mutual fund in India, would set the benchmark for the industry, sources said.

The fund house held preliminary discussions with the government this week regarding the IPO and pension fund plans.

According to highly placed sources, the board of UTI AMC and Trustees met on the first week of this month to discuss on the structure of the company to be listed on the bourses.

Legal advisor Amarchand Mangaldas has suggested a number of options, including the formation of a holding company, which will buy the sponsors' stake, which would later be offered through the IPO.

Life Insurance Corporation of India (LIC), State Bank of India, Punjab National Bank and Bank of Baroda together hold 25 per cent each in the AMC. They had bought the government's stake in the fund house in 2005 for Rs 1,236 crore.

Sources said the current plan was to dilute 50 per cent each of the sponsors' stake through the IPO.

UTI MF has two subsidiaries "� UTI International, headquarted in London, which is into offshore funds, and UTI Ventures, headed by Raja Kumar, who manages the venture capital funds.

The AMC will be setting up its third subsidiary soon to manage the pension fund.

"We are yet to appoint merchant bankers and take a final call on the structure of the company to be listed," said U K Sinha, chairman and managing director, UTI Mutual Fund.

UTI AMC has close to 8.5 million customers and manages assets of over more Rs 39,000 crore. The size of the IPO is yet to be finalised, but sources said the valuation of the AMC would be close to Rs 4,000 crore.

StanChart MF, which handles Rs 13,000 crore, has a valuation of Rs 516 crore. In the case of UTI AMC, the valuation will include the business of its subsidiaries and the UTI building, located in the central business area of Bandra Kurla Complex in Mumbai.