UTI Asset sponsors ready to exit at a premium

Four sponsors of UTI Asset Management Company "" the Life Insurance Corporation of India, State Bank of India, Punjab National Bank, and Bank of Baroda "" are willing to sell their stakes to a set of new sponsors at a premium.

The finance ministry is planning to ask Syndicate Bank, Uco Bank, Union Bank of India and Oriental Bank of Commerce to step in as new sponsors of UTI Asset Management Company.

Unlike the existing promoters, these four players do not have any asset management company (AMC) of their own.

The ministry is working on the proposal as the capital market watchdog Securities and Exchange Board of India (Sebi) has expressed its reservations with the existing sponsors since they already have their own asset management companies.

Sources in the know of the development said Sebi feels that UTI Asset Management Company should be sponsored by entities which do not have any AMC of their own. Syndicate, UCO, Union Bank and Oriental Bank of Commerce fit the bill.

Going by the Sebi mutual fund norms, no entity can float more than one AMC. This is to ensure there is no conflict of interests.

A source among the sponsors said the four financial intermediaries stepped in when the government needed their support to restructure the erstwhile and they expect a premium when they are exiting.

The exact pricing will be based on the valuation of the AMC to be carried out by two independent valuers.