Shares of UTI Asset Management Co. Ltd (UTI AMC) had a weak stock markets debut on Monday. The stock listed at 500 apiece, a 9.7% discount to its issue price of 554. The mutual fund company's initial public offering (IPO) at a price band of 552 -554 apiece was subscribed 2.3 times. The three-day sale, which aims to raise 2,160 crore in the upper price band, closed on 1 October.

                         

Shareholders State Bank of India, Punjab National Bank, Bank of Baroda, Life Insurance Corporation of India and T Rowe Price International pared their stake in UTI AMC via the IPO. SBI, BoB and LIC were planning to 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 red herring prospectus, SBI, LIC, BOB and PNB hold 18.24% each while T Rowe has a 26% stake in UTI AMC.

UTI AMC manages 153 domestic mutual fund schemes, comprising equity, hybrid, income, liquid and money market funds as of June. As of June, the total quarterly average assets under management (QAAUM) for domestic mutual funds was 133,630 crore, while the other AUM was 849,390 crore. It offers portfolio management and asset management services for government retirement funds such as the NPS and EPFO, overseas funds and AIFs. UTI has four subsidiaries namely UTI Retirement Solutions, UTI International, UTI Capital and UTI Venture Funds Management.

According to CRISIL, UTI AMC is the largest AMC in India in terms of total AUM, seventh-largest AMC in India in terms of mutual fund QAAUM with 1,54230 crore, and also has the largest share of monthly average AUM amongst top ten Indian AMC coming from B30 cities.

According to Parvati Rai, research-head, KRChoksey Shares and Securities Pvt. Ltd, UTI’s product mix remains tilted towards debt and liquid assets which are less favourable to retail investors.

Market leaders like HDFC Asset Management Company and ICICI Prudential Mutual Fund have a more favourable mix, with equity assets and hybrid assets commanding a greater share in total AUM as compared to the industry. "If we compare the valuations of HDFC AMC and Nippon India Mutual Fund (NAM India) to UTI AMC, fair value turns out to be 750-760. Hence, in terms of valuation, the IPO looks attractive in terms of valuation and an upside potential of 35%," she said.