The Hindu Business Line : UTI ready to gobble big MFs

Mr M. Damodaran, Chairman, UTI Asset Management Company (right), with Mr M. Venugopalan, CMD, Bank of India, at a press conference in the Capital on Tuesday. — Ramesh Sharma

New Delhi , Feb. 10

THE mutual fund industry is in for a major shake-up, with the country's largest mutual fund, UTI Mutual Fund, on the prowl for acquisitions.

The Chairman, UTI Mutual Fund (UTI MF), Mr M. Damodaran, today said that the target group for acquisition would be the large-sized mutual funds.

"We would look for anything that is worth our while to acquire. Size would be a major consideration," Mr Damodaran said, while stating that he would not be interested in smaller funds with comparatively small amounts of assets under management.

UTI Mutual Fund had entered into a deal to acquire IL&FS Mutual Fund involving Rs 2,500 crore of asset under management.

"Today there are 31 players in the mutual fund industry. In the next few years there would be lesser numbers as many of them are not making profits and could be up for acquisition," he said.

Mr Damodaran was speaking at a function organised to ink a deal with Bank of India (BoI) under which the bank would distribute the UTI MF products. BoI would distribute the mutual fund products through 125 of its identified branches.

Responding to a question on UTI's holding in UTI Bank, Mr Damodaran said that the promoter was not looking at selling its stake at present.

"UTI Bank is a very strong bank. We are not in a hurry to get out," he said. UTI holds 33.46 per cent in UTI Bank through the Specified Undertaking of the UTI (UTI-I) that houses all the assured return schemes of the erstwhile UTI.

He hinted that UTI was prepared to hold on to its stake in the bank even at a later date if UTI-I is phased out.

"There could be a structure where the holding in UTI Bank can be retained within the UTI family," he said.

On the move to change the four sponsors of UTI MF (LIC, SBI, PNB and BoB), in view of the clash of interest as all of them have their own mutual funds, Mr Damodaran said that the issue to be settled is on the pricing of the holding of the sponsors at the time of their exiting the fund. "The sponsors were initially reluctant but now are demanding a premium," he said.

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