IPO Analysis: UTI AMC

IPO Analysis: UTI AMC

UTI AMC is in the business of managing the domestic mutual funds of UTI Mutual Fund, provides portfolio management services to institutional clients and high net worth individuals like Employee Provident Fund Organisation, National Skill Development Fund, Postal Life Insurance, and manages retirement funds viz. NPS, offshore funds like Shinsei UTI India Fund, and alternative investment funds catering to a diverse group of individuals, institutional investors, banks, trusts, and NRIs. It is incorporated on 2002.

Key Facts

According to CRISIL, UTI AMC is the largest AMC in India in terms of Total AUM, seventh-largest AMC in India in terms of mutual fund QAAUM with Rs 1,542.3 billion, and also has the largest share of monthly average AUM amongst top ten Indian AMC coming from B30 cities.

The management fees from domestic mutual funds account for 72.7% of the total income of the company.

• AMC has established the first mutual fund in India and has been in the asset management industry for more than 55 years with a strong history and proven track record in mutual fund mutual industry with strong brand recognition.
• AMC has 11 million live folios accounting for 12.8% of client base managed by the Indian mutual fund industry.
• AMC has a national footprint with 163 UTI Financial Centres, 273 Business Development Associates and Chief Agents and 33 other Official Points of Acceptance. UTI AMC also has approximately 51,000 Independent Financial Advisors.
• AMC has four sponsors SBI, LIC, PNB and BOB each of which has the Government of India as a majority shareholder. UTI AMC also has a global asset management company T. Rowe Price International Ltd as one of its major stakeholders with a 26% stake in the Company.
• As of September 30, 2019, UTI AMC manages 178 domestic mutual fund schemes, comprising equity, hybrid, income, liquid, and money market funds.

About IPO:

The IPO comprises an offer for sale of up to 3,89,87,081 equity shares by five shareholders.

State Bank of India, Life Insurance Corporation of India and Bank of Baroda will sell up to 1,04,59,949 equity shares each via public issue, while Punjab National Bank and T Rowe Price International (TRP) will divest up to 38,03,617 equity shares each.

The offer includes a reservation of up to 2 lakh equity shares for eligible employees. The total offer would constitute at least 30.75 percent of the post-offer paid-up equity of the company.

One can bid for a minimum of 27 equity shares and in multiples of 27 equity shares thereafter.

As of June 2020, its distribution network includes 163 UTI Financial Centres (UFCs), 257 Business Development Associates (BDAs) and Chief Agents (CAs) (40 of whom operate Official Points of Acceptance (OPAs)) and 43 other OPAs, most of which are in each case located in B30 cities. The company also has offices in London, Dubai, Guernsey and Singapore, through which it markets offshore and domestic mutual funds to offshore investors who seek to invest in India.

Aggregate AUM of the Indian mutual fund industry has grown at a healthy pace over the past ten years, against the backdrop of an expanding domestic economy, robust inflows and rising investor participation, particularly from individual investors. Average AUM grew at a CAGR of 13 percent from Rs 7.6 lakh crore (trillion) as of March 2010 to Rs 27 lakh crore as of March 2020.

Verdict:

As per SEBI guideline SBI, Bank of Baroda and LIC is existing from UTI AMC, for which IPO is launched. Since this company is working with investment in PMS and mutual Fund, this business is still untapped with huge potential. Hence one can apply for this IPO for long term, as i don't think any listing gains. 

Sources: Various publications

Disclaimer: The information provided herein is based on publicly available information and other sources believed to be reliable, but involve uncertainties that could cause actual events to differ materially from those expressed or implied in such statements. The document is given for general and information purpose and is neither an investment advice nor an offer to sell nor a solicitation. While due care has been exercised while preparing this document, we do not warrant the completeness or accuracy of the information. We will not accept any liability arising from the use of this material. The recipient of this material should rely on their investigations and take their own professional advice.

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