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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Review: UTI Long Term Advantage Fund (Save Tax benefit)

UTI Mutual Fund has come out with the NFO of its UTI Long Term Advantage Fund
UTI Mutual funds have been the front runners in the mutual fund industry in India and they have established a reputed name in money management. They have come out with this new fund called UTI Long Term Advantage Fund. Though the NFO is open from 19th December onwards, the scheme offering tax benefit will make it an attractive and considerable option for the people who want to desperately invest to save tax at the last minute.

Another thing is that presently, the markets are having a high level of volatility and have seen hovering around the bottoms. The 3 year lock-in period will ensure your money is invested in for a relatively long term of 3 years and may appreciate, provided you trust the UTI Fund management and they have good stock picking skills.
Another good feature is that this scheme being closed ended, does not qualify to claim entry load charges. Hence, it is attractive for investors who are dying for making a last minute tax savings investments.

Details of the scheme: 10 year long close ended ELSS scheme, which also offers tax benefits under section 80 C of the Income Tax Act.
NFO Period: From December 19, 2007 to March 19, 2008.

Options Available
Growth Option and Dividend Option with Payout and Reinvestment facilities.

Tax Benefit Offered: Yes, under section 80 C of Income Tax Act

Lockin Period: 3 years (minimum)

Minimum initial investment: Rs.500/- and in multiples of Rs.500/- thereafter with no upper limit.
But as per section 80 C of the Income Tax Act, 1961, the tax benefit will be available only upto a maximum amount of Rs.1,00,000/-

Entry Load: The scheme, being a close-ended scheme, is not permitted to charge Entry Load.

Exit Load : Nil. If the investor opts for redemption before the completion of 10 years the proportionate unamortized portion of the NFO expenses outstanding as on the date of the redemption shall be recovered from such investors.

Fund Manager: Ms. Swati Kulkarni
The scheme aims to provides an opportunity for capital appreciation through investment in well managed high quality companies that have potential to grow at reasonable rate in the long term

The so-called claimed benefits of investment in Equity Linked Saving Scheme

1 Opportunity for capital appreciation through power of equities


2 Tax benefits under Sec 80 C of Income Tax Act – 1961 - Contribution made by individuals & HUFs will be eligible for deduction of the whole of the amount paid or deposited subject to maximum of Rs. 100000/-
(along with other specified investments) under Section 80 C of Income Tax Act, 1961 as provided therein.


3 No long term capital gains tax (Subject to Securities Transaction Tax) on investment under equity oriented fund including ELSS Scheme.


4 Tax free dividends.

5 Shorter lock-in period in comparison to most of other tax saving instruments. 6 3 year lock- in period helps in minimizing volatility. However, the biggest advantage for investing in this scheme is that due to the lock-in period of 3 years, there will be no Long Term Capital gains tax and dividends are also taxfree

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