tata stake UTI AMC: Tata in final talks to buy majority stake in UTI AMC from PSU fin cos | Popgen Tech

Mumbai: The Tata Group is in final negotiations to buy a majority stake in India’s eighth-largest mutual fund, UTI Asset Management Co (AMC), from four state-owned financial entities, according to people close to the -development. (), (), State Bank of India () and Bank of Baroda (BOB) together hold a 45.16% stake in . A final agreement is being sought on the assessment of the agreement, the people said.

Officials close to the development said internal approvals are in place and Tata has received a nod in principle from the other major investor in AMC – global investment management firm T Rowe Price Group, which owns about 23%. ET had first reported Tata’s interest in acquiring UTI AMC in August this year. If the deal goes through and Tata AMC and UTI AMC merge, the combined entity would be the fourth largest asset manager in India.

Transaction Value

SBI AMC, AMC and are the first three in the list.

Two Tata Group entities – Tata Sons and

– owns 68% and 32%, respectively, in Tata AMC.

UTI AMC, listed in October 2020, commanded a market capitalization of Rs 9,791 crore on Friday. At the current market price, the Tata Group will have to pay around Rs 4,400 crore to buy a 45% stake in UTI AMC and another Rs 2,500 crore for the mandatory open offer of 26%.

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

UTI AMC has no promoters but sponsors like LIC, PNB, SBI and BOB. T Rowe Price Group held a 22.97% stake as of September 30 through T Rowe Price International.

Tata AMC, LIC, SBI, PNB and BOB did not respond to queries.

UTI AMC posted a net profit of ₹ 534 crore on revenue of ₹ 1,319 crore in FY22. Tata AMC reported revenue of ₹ 342 crore and net profit of Rs 103 crore in FY22.

Earlier this year, PNB said it wants to monetize its non-core assets and this includes selling its stake in UTI AMC. In October 2020, the lender sold its 3% stake in UTI AMC for around ₹ 180 crore, bringing the ownership down to 15.22%.

In December 2019, the Securities and Exchange Board of India (Sebi) directed LIC, SBI and BOB to reduce their stake in UTI AMC by December 2020. These three financial institutions of the public sector held 18.24% each at that time, while Sebi’s cross-holding norms for mutual funds do not allow the sponsor of one AMC to hold more than 10% in another. Subsequently, all three reduced their stakes to below 10% during the IPO in October 2020.

The latest M&A deal in the ₹ 38 lakh crore mutual fund industry was by a consortium made up of Bandhan Financial Holdings Ltd,

and ChrysCapital, which acquired Mutual Fund for ₹ 4,500 crore. In December last year, HSBC AMC acquired L&T Investment Management for around ₹ 3,200 crore. Baroda Asset Management recently merged with Asset Management India.

In a smaller deal,

AMC acquired the assets of Principal Asset Management for around Rs 340 crore last year.