UTI Mutual Fund Gets Award - Feb 10, 2009

ICRA Mutual Fund awards 2009 has honored the UTI Mutual Fund with 'Star Fund House of the Year' in the equity category for one year period ending December 2008. The fund was also awarded nine ICRA Mutual Fund Awards 2009 under its various schemes.

According to Chairman and Managing Director, UTI Asset Management Company Ltd., U K Sinha, this is a result of the structural and process changes that we had initiated around 2 years back. The efforts of UTI fund management team has concluded in UTI Mutual Fund winning the Star Fund House of the Year award in the Equity Category. UTI Mutual Fund is a process oriented fund house which strives to give its investors the best possible returns. Recently UTI Mutual Fund has also won the Outlook Money NDTV Awards 2008 for the Best Debt Fund House for the year ended June 30, 2008.

UTI AMC To Sell 10-12% For $200 Mn

UTI Asset Management Company is roping in an international strategic investor for expanding its operations abroad. The investor, to be chosen from a slew of interested parties, will buy 10-12% equity in the country’s second largest mutual fund house for around $200 million.

Half-a-dozen interested parties including Goldman Sachs, Lehman Brothers, Warburg Pincus, Singapore’s GIC and Japanese Shinsei Bank — are vying for the stake. Sources close to the development said the deal is expected to be finalised very soon.

The shortlisted parties will submit final financial bids by end of the week. Valuations may take a minor plunge, owing to the current volatility in the market, said the sources. The country's second largest fund house, after R-ADAG's Reliance Capital Asset Management, had asset under management (AUM) of about Rs 57,000 crore, as on 31 December 2007.

Last month, Eton Park Capital Management, the hedge fund firm founded by former Goldman Sachs Group partner Eric Mindich, acquired 4.76% in Reliance mutual fund house for Rs 501 crore. The deal valued Reliance’s mutual fund at Rs 10,521 crore. The company said in a statement that the equity proceeds would be utilised for its domestic and international expansion.

According to analysts, asset management companies are usually valued at 5-10% of their assets under management. In the case of Reliance AMC, the valuation was at 12-13% of the AMC’s AUM. UTI AMC has already filed draft red-herring prospectus for its proposed initial public offer for 4.85 crore equity shares with the market regulator Sebi.

The company will also make a fresh issue of 2.5 crore shares, out of which 1.6 crore will be privately placed with investors in the pre-IPO sale and 90 lakh shares issued to employees under its employee stock option plan (Esop).

The IPO is estimated to raise close to Rs 2,000 crore and would involve part-sale of shares held by its promoters SBI, LIC, PNB and Bank of Baroda.

Citigroup Global Markets India, Enam and JM Financial Consultants are arranging the share sale. CLSA, Goldman Sachs (India), ICICI Securities, SBI Capital Markets and UBS Securities India are also managing the sale.

UTI AMC was created by the government splitting the state-run Unit Trust of India into two in February 2003, following its failure to pay investors because of a shortfall between the returns it guaranteed and the market value of its assets. In 2005, the government asked the four sponsors including SBI, LIC, Punjab National Bank and Bank of Baroda to each hold a 25% stake in the asset manager.