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India’s oldest fund to boost IPO flow as holders exit

UTI selected investment banks to arrange a sale which could raise about 26 billion rupees.

Bloomberg|
Dec 11, 2019, 03.59 PM IST
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Life Insurance Corp., State Bank of India and Bank of Baroda must reduce their stakes in UTI Asset by the end of 2020, the country’s market regulator said in a Dec. 6 statement.
By Fox Hu

UTI Asset Management, India’s oldest mutual fund, is set to go public next year after some of its shareholders came under regulatory pressure to cut stakes.

Life Insurance Corp., State Bank of India and Bank of Baroda must reduce their stakes in UTI Asset by the end of 2020, the country’s market regulator said in a Dec. 6 statement. The order stems from a cross-holding limit in mutual funds to avoid potential conflicts of interest.

Existing shares continue to drive the Indian IPO market, where deal value has dropped to a four-year low. Initial sales have raised $2.7 billion in India this year, with existing shares accounting for about half of the value, according to data compiled by Bloomberg.

State Bank of India and private-equity firm Carlyle Group also plan to sell shares in a listing of the lender’s credit card unit, which could raise more than $1 billion.

The offering of existing shares play a minor role in most other Asian markets. China has virtually no secondary shares in IPOs, while existing equity accounts for only 3 per cent of Hong Kong’s $37.5 billion deal value this year, data compiled by Bloomberg show.

UTI selected investment banks to arrange a sale which could raise about 26 billion rupees ($367 million), people with knowledge of the matter said in October. The asset manager plans to launch the offering of about 40 billion rupees in the first quarter of 2020, IFR Asia reported last week.
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