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Tata Group to create new large asset manager; in final talks to acquire a majority stake in UTI AMC | Popgen Tech

December 19, 2022 Popgen Tech acquire, AMC, asset, Create, Final, Group, Large, majority, manager, Popgen, stake, talks, Tata, Tech, UTI

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Tata Group to create new large asset manager; in final talks to acquire a majority stake in UTI AMC

Photo: BCCL

New Delhi: The 150-year-old Tata Group may soon take a majority stake in India’s eighth largest mutual fund, UTI Asset Management Co (AMC). The conglomerate is in final discussions for the stake, which it will buy from four state-owned financial entities – Punjab National Bank, Life Insurance Corporation of India, State Bank of India and Bank of Baroda.

PNB, SBI, LIC and BOB together have 45.16 percent ownership in the country’s eighth largest mutual fund. The combined entity, if the deal goes through and Tata AMC and UTI AMC merge, will become India’s fourth largest asset management company. The Tata deal is in the final stages and an agreement on valuation is being sought, people familiar with the development told the Economic Times.

SBI AMC, ICICI Prudential AMC and HDFC AMC are the top three managers in India, according to data from Amfi.

Tata eyeing major stake in UTI AMC

Internal approvals for the deal are in place and the Tata Group has also secured a nod in principle from the other major investor in AMC – global investment management firm T Rowe Price Group – which has a 23 stake in -100 in it, according to officials in the knowledge of this.

Tata AMC’s ownership, on the other hand, is such that Tata Sons and Tata Investment Corporation hold 68 percent and 32 percent, respectively.

UTI AMC stock jumps!

UTI AMC, listed in October 2020, stock rose more than 12 percent on Monday after reports suggested Tata’s interest in it. As of Friday’s close, it had a market capitalization of Rs 9,791 crore. The Tata Group will have to pay around Rs 4,400 crore for a 45 percent ownership in the MF at the current market price and another Rs 2,500 crore for the mandatory open offer of 26 percent.

The assets under management (AUM) of UTI AMC as on September 30 were Rs 2.34 lakh crore or about 6 percent of the total AUM. Tata AMC, the 12th largest in terms of AUM, managed assets of Rs 91,284 crore as on 30 September.

PNB, LIC, SBI, BOB reduce stake in UTI AMC

It is worth mentioning here that public lender PNB had earlier this year shared its desire to monetize its non-core assets which includes the sale of its stake in UTI AMC. In October 2020, the bank had sold 3 percent stake in UTI AMC for around Rs 180 crore, reducing its stake to 15.22 percent.

Three years ago in December 2019, market regulator SEBI had also instructed LIC, SBI and BOB to reduce their stake in UTI AMC by December 2020. These three public sector financial institutions had 18.24 per cent each at that time, while Sebi’s cross-holding norms. for mutual funds do not allow the sponsor of one AMC to have more than 10 percent in another.

Subsequently, LIC, SBI and BOB had reduced their stake in UTI AMC to less than 10 percent during the IPO in October 2020.

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