Shares of UTI Asset Management Company (AMC) zoomed 15 per cent to ₹862 a piece on unconfirmed news that Tata AMC has entered into talks with public sector banks to increase its stake in the listed entity. The acquisition of majority stake in UTI AMC will catapult Tata AMC to become the fourth largest behind SBI MF, ICICI Prudential MF and HDFC MF.
Tata AMC currently owns 2.62 per cent stake in UTI AMC.
The entry of new-age fintech companies in asset management business has stifled growth of legacy players and leading to consolidation in the mutual fund industry which has 44 players.
As of June quarter, UTI AMC has an average asset under management of ₹2.24 lakh crore and Tata AMC ₹88,367 crore.
T Rowe Price, one of the early investors in UTI AMC, is still the largest shareholder with 22.97 pet cent stake, currently.
Public sector banks Bank of Baroda and State Bank of India which had about 18 per cent stake each in UTI AMC brought it down to 9.98 per cent when UTI AMC went public in 2020. Insurance and financial services behemoth LIC also diluted its holding to 9.98 per cent during UTI AMC's IPO.
SEBI has directed sponsors who had their own mutual funds to reduce stake in UTI AMC.
As per SEBI norms, sponsors of a MF, its associate or group company including the AMC of the fund, cannot have more than 10 per cent shareholding or voting rights in the AMC or the trustee company of any other mutual fund.
The two public sector banks — SBI and BoB — with the exception of PNB and LIC have their own asset management business. PNB exited the business and now holds 14.99 per cent in UTI AMC.
The mutual funds that own a stake in UTI AMC include Mirae MF (4.65 per cent), Invesco MF (1.81 per cent), ICICI Prudential MF (1.47 per cent) and HDFC MF (1.14 per cent).