Sources in the know said while LIC is willing to dilute some stake in UTI mutual fund, but it is not in favour of exiting the company. It also has reservations regarding the valuation of the company.
New Delhi : Life Insurance Corp of India has given a “conditional” approval to the initial public offering plan of UTI Asset Management Co Ltd, multiple sources in the know said.
The approval will pave the way for the long-awaited listing of the asset manager on Indian bourses. Sources said LIC is “willing” to dilute “some” stake in UTI AMC, but is not in favour of exiting the company. However, the insurance behemoth is not on the “same page” with the asset manager regarding valuations, they said.
According to the listing plan, four state-run sponsors of UTI AMC–State Bank of India, Bank of Baroda, Punjab National Bank and LIC—will soffload at least 35-40% of their stake through the IPO, the source said. The four sponsors hold 18.5% stake each in the company, while US-based asset manager T Rowe Price holds the remaining 26%. Punjab National Bank and Bank of Baroda, looking to monetise some of their non-core assets, are willing to exit UTI AMC and are in sync with the initial valuations arrived at for the IPO. “SBI is closely following the issue and will take a final decision based on LIC’s actions. But, the bank broadly favours the IPO plan,” one of the sources said.
“LIC is of the opinion that the valuations of the company may rise significantly after listing. Hence, it is in no hurry to exit the company,” another source said.
UTI Mutual Fund is looking to raise 35-40 bln rupees via the proposed IPO, valuing the company at around 100 bln rupees, the source said. Since LIC has some reservations about the valuation, it has asked the board of UTI AMC to reassess the valuation before listing.
Recently Cogencis reported that the finance ministry has requested the insurer to support the listing plan without any pre-condition. “LIC has diluted its stance and agreed to withdraw conditions regarding the appointment of a chairman and nominee director to the board of UTI AMC,” a finance ministry official said. A LIC official said that the insurer may look at diluting its stake in the asset management company if the valuation is good as it is trying to maximise gains for policy holders.
