US-headquartered T Rowe Price International, the single largest shareholder of UTI Mutual Fund, has withdrawn a petition filed in the Bombay High Court against the Centre and four other shareholders — SBI, LIC, Punjab National Bank and Bank of Baroda.

The withdrawal of petition follows the public sector entities assuring T Rowe that they will abide by SEBI norms and bring down their stakes before the March 2019 deadline. SEBI has also taken a view that T Rowe need not reduce its stake in UTI Mutual Fund. “Thanks to the intervention of the Department of Investment and Public Asset Management and UTI Board Members and Trustees, the matter has been settled amicably, with T Rowe Price withdrawing its petition. Also, necessary steps for SEBI compliance for listing is going to happen now,” said a source with knowledge of the developments.

Cross-holding norms

T Rowe wanted the court to issue directions to SEBI and the Finance Ministry to ensure that other shareholders reduce their stakes to 10 per cent from 18.25 per cent through an initial public offering so as to meet the market regulator’s norms on cross-holding. All the four shareholders have presence in mutual fund business through their own subsidiaries.

When the case came up for the first hearing on August 13, T Rowe sought more time from the court to study the latest developments. The case was then adjourned to August 28.

In July, T Rowe, which has over $1 trillion assets under management, had written to SEBI seeking its intervention in the affairs of UTI MF. It claimed that “independent directors on the board of the AMC (nominated by LIC, SBI and PNB), without consulting TRP’s nominee directors, had challenged and opposed the decisions of the trustees, accused the trustees of being prejudiced against the independent directors and refused to accept the directions passed by the trustees”.

T Rowe’s writ petition said its past attempts to get intervention of SEBI and the Finance Ministry were not successful and hence, it was forced to file the petition in court. However, T Rowe’s bid to prepare UTI MF for initial public offering by retaining former Managing Director Leo Puri through the court failed.

The board had appointed Imtaiyazur Rahman, Group President and CFO, as the acting CEO with effect from August 14.

Rahman, who is also on the boards of UTI International Singapore, offshore funds of UTI International, and Invest India Micro Pension, has been with the UTI Group since 1998 and with the UTI AMC since 2003.