SBI, LIC, Punjab National Bank, and Bank of Baroda – sponsors of UTI Mutual Fund are initiating the process to reduce their stake in India’s oldest fund house. They have approached merchant bankers to advise them on the sale of stakes. The sponsors have a combined holding of 45.21% in the paid-up capital. Last year, PNB received government approval for a complete divestment of its stake in UTI Asset Management Company Limited as part of its non-core asset sale plan to shore up its capital base.
The sponsors diluted their stake in UTI through an IPO in 2020 by selling 38,987,081 shares for INR 2,100 crores. The entire proceeds of the offer went to all the promoters, including T Rowe Price, which has a 23% stake in UTI Asset Management. UTI Mutual Fund was created in 1964 after Parliament passed the Unit Trust of India (Transfer of Undertaking & Repeal) Act in 2002. After its flagship US-64 scheme went bankrupt, the then mighty UTI was bifurcated into Specified Undertaking of Unit Trust of India (Suuti), which owns almost 11.8% of Axis Bank, and UTI Asset Management Company.
DIPAM, last year, allowed Public Sector Enterprises (PSEs) wanting to divest stake in their subsidiaries to submit the proposal to their respective administrative ministries. The DIPAM on Thursday laid down guiding principles for strategic disinvestment/minority stake sale of PSE subsidiaries/units or their joint ventures. As per the guidelines, the board of holding/parent PSE would recommend strategic disinvestment/minority stake sale of its subsidiaries/units/JVs to the administrative department, which would examine the proposal and send it to DIPAM. The decision of the AM would be communicated to the parent public sector enterprise, following which its board would undertake the transaction.
