LIC, SBI and BoB are likely to opt for an exit through IPO of UTI AMC in order to comply with the SEBI rule of crossholding across AMCs and Trustees, a source close to the development told Cafemutual.
This source requesting anonymity said that an IPO would help the sponsors get a better price.
On Friday, SEBI has directed LIC India, SBI and Bank of Baroda to slash their shareholding to less than 10% in UTI AMC before December 2020 in order to comply with crossholding rules of the regulator.
If these entities failed to comply with the norms within the stipulated time, the market regulator will freeze their voting rights in excess of 9.99% and other benefits.
SEBI’s regulation with regard to crossholding was introduced with an intention to address the conflict of interest arising where the sponsor of an AMC or Trustee is also a substantial shareholder in another AMC/trustee. This conflict of interest could affect the functioning and performance of the mutual fund industry as a whole.
Currently, UTI AMC has five shareholders – T Rowe Price, Punjab National Bank, SBI, LIC and BoB.
While T Rowe Price and Punjab National Bank do not have AMC business in India, three shareholders – LIC, SBI and BoB are promoters of AMCs and hold a majority shareholding.
