UTI AMC IPO

One of the biggest asset management companies (AMC) of India, UTI AMC, which was planning to come out with an IPO has fallen victim to the market pressure.
The UTI AMC IPO which was set to hit the market this month, i.e. in March 2008, has been delayed till further notice.

UTI AMC is India’s third largest AMC and manages assets almost amounting to 53,00,000 crore Rs.

It mentioned that it is delaying the IPO due to “inappropriate” valuation of the UTI AMC before the IPO deal. Actual reason may be the turbulent market timings.

The plan was to offer around 5% of the shares to the public through the IPO process. While the financial investors had come up with a figure close to 8% of the asset under management for the AMC, the company still thinks that the valuations are not upto the expectations.

This would have been the firs ever IPO by an Indian Mutual fund company. Now, the AMC is looking at a possible date next month for the IPO, whose size was pegged at Rs 1,800-2,400 crore, the source said.

Related: Should you apply for an IPO?

Turbulence in the secondary market, which has seen the Sensex dipping by 24 per cent since its January peak, as also Emaar MGF and Wockhardt Hospitals withdrawing their IPOs due to weak investor response, is primarily responsible for the UTI mutual fund’s decision to delay its offer.

The latest development in the mutual fund industry was a big news last week when the Standard Chartered Mutual Fund was sold to IDFC.

While in December, Reliance Capital’s 5 per cent shares were sold to Eton Park hedge fund.

That deal valued Reliance Capital AMC at 13 per cent of its assets managed at that time. Hence the UTI AMC may be looking at that kind of valuations, in the range of 13-14% instead of the currently quoted 7-8%. Let’s see when this IPO finally makes to the markets. Only then one can look at the price bands and valuations of the IPO.

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