SBI plans to sell UTI AMC stake through public issue

State Bank of India plans to offload 8.25 per cent stake in UTI Asset Management Company through an offer-for-sale (OFS) in through an initial public offering being planned by the AMC.

The board of directors of the bank met on Wednesday and gave the final approval for divestment of stake in UTI AMC of up to 1,04,59,949 equity shares subject to SEBI approval.

The IPO is expected by the end of this fiscal as talks with investment bankers are in the final phase, according to market sources.

UTI AMC is looking to raise about ₹2,600 crore through the IPO.

The IPO will be an OFS by existing shareholders, mainly Life Insurance Corporation, State Bank of India, Bank of Baroda and Punjab National Bank. The four entities own 18.25 per cent stake while US-based T Rowe Price owns 26 per cent.

Cross-holding norms

The IPO was necessitated due to the cross-holding norms announced by SEBI last year.

In a bid to eliminate potential conflict of interest, the cross-holding norm mandates that if a shareholder has at least a 10 per cent interest in a mutual fund, it cannot hold a similar-sized stake in another fund house and would also have to give up its board positions.

The two listed AMCs — HDFC AMC and Reliance Nippon Life AMC — are in great demand and have risen sharply in the last few months.