Financial Daily from THE HINDU group of publications
Tuesday, Apr 06, 2004
Asset Management Companies
UTI sponsors appoint agencies to value shares of asset co
Kolkata , April 5
FIVE independent agencies have been appointed by the sponsors of UTI Asset Management Co to ascertain the value of its shares as part of a plan to further unbundle UTI Mutual Fund.
The plan may eventually lead the asset management company towards an IPO.
UTI MF is contemplating a structure marked by a holding company, 60 per cent of whose capital will be held by non-institutional investors, including members of the public.
The proposal, among the several that are being talked about, will have to be weighed by UTI's sponsors State Bank of India, Punjab National Bank, Bank of Baroda and Life Insurance Corporation.
Among the alternatives that have been discussed at the highest level is the formation of such a holding entity, said Mr M. Damodaran, CMD of UTI MF. This will be particularly relevant in a situation where UTI Specified Undertaking will not be in operation any longer.
The focus, therefore, will be entirely on the proposed ownership arrangement, one that will vigorously promote the UTI brand name.
"The situation is quite fluid at the moment. We would have to see how it would be possible to replace the current sponsors by other capable parties. There could be several possible combinations," he added.
It may be mentioned here that all the four sponsors run their own asset management businesses.
Mr Damodaran, who was here today to announce a strategic tie-up with Allahabad Bank, referred to the entities that form part of the UTI group.
These include UTI Bank, UTI Securities and UTI Investor Services - companies that will be especially significant for the proposed the holding outfit.
He also compared the probable situation with what he said was the "NTC model". NTC (National Textile Corporation), in its current form, does not run textile mills of its own.
Capital-guaranteed schemes on anvil
UTI Mutual Fund is mulling distribution of capital-guaranteed schemes, chiefly aimed at overseas investors and based on some of its existing products, including Mastergain and MasterPlus.
It has, however, decided on a caveat It will not provide the guarantee itself.
The fund house, according to its CMD, Mr M. Damodaran, has recently worked with SG a foreign institution on such a scheme. While this was not a first for SG, it was indeed the first instance of its kind for UTI MF.
"We do not have an institutional relationship with SG, but we may consider one-off arrangements with it or other entities," he said, adding that investors in the Gulf and Europe had been targeted earlier.
Both MasterPlus and Mastergain are chiefly equity-oriented schemes, seeking capital appreciation through investments in the stock markets, convertible debentures, derivatives in India and also in overseas markets.
Meanwhile, UTI MF's latest product, Thematic Fund, has mobilised savings from 55,000 retail investors, it is pointed out. The umbrella fund has six sectoral schemes within it. These are schemes that are focused on stocks that conform to certain strong themes: large-cap, mid-cap, basic industries, banking, automobiles and public sector undertakings.
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