UTI Asset Management Co. Ltd (UTI AMC) on Thursday said it will launch its long-anticipated initial public offering (IPO) next week, hoping to capture the attention of investors at a time when equity markets have turned choppy.

The mutual fund company will offer its shares in the price band of 552 -554 apiece. The three-day sale, which aims to raise 2,160 crore in the upper price band, closes on 1 October.


The IPO will see shareholders State Bank of India, Punjab National Bank, Bank of Baroda, Life Insurance Corporation of India and T Rowe Price International pare their shareholdings in UTI AMC. SBI, BoB and LIC will divest an 8.25% stake each, while T Rowe and PNB will sell 3% each. On an aggregate basis, all the existing shareholders will reduce their stake in UTI AMC by around 30.75%.

According to the draft prospectus, SBI, LIC, BOB and PNB hold 18.24% each while T Rowe has a 26% stake in UTI AMC.

The share sale comes when the mutual fund industry is struggling with redemption pressures resulting in outflow in schemes and decline in systematic investment plans (SIP). The June quarter was challenging for mutual funds as active equity inflows declined while contributions from SIPs shrank due to a correction and volatility in the stock markets.

“We were planning to launch the issue in March, but it was delayed mostly due to the covid outbreak," Imtaiyazur Rahman, chief executive officer of UTI AMC, said. Post pandemic, the company had to include additional information such as covid-related disclosure, dividend policy, pension liabilities and financial results in the prospectus.

Last year, the Securities and Exchange Board of India (Sebi) had directed LIC, SBI and BoB to reduce their stakes in UTI AMC by December, failing which, the regulator would freeze excess voting rights. In August, Sebi fined all three 10 lakh each for failing to do so.

“We believe UTI AMC will garner strong interest from an investor as AMC business is high RoE and cash-generating business. Listed AMC HDFC trades at 12.8% and Nippon AMC 9% of June AUM. Now final demand for UTI AMC would depend on at what valuation IPO demands. A valuation less than listed peers would create more demand for UTI AMC," Jaikishan Parmar, senior equity research analyst, Angel Broking Ltd said.

Meanwhile, the government is kick-starting its divestment process by selling its stake in Mazagon Dock Shipbuilders Ltd. The government will sell 15.17% stake in the 444 crore issue. The price band of the issue is 135–145 per share and the three-day share sale will commence on 29 September.