UTI Asset Management IPO

UTI AMC IPO Details

UTI AMC IPO Tentative Timetable

UTI AMC IPO Category-wise Break Up

About the company – UTI Asset Management Company Limited

UTI Asset Management Company Limited (UTI AMC) is the second-largest asset management company in India in terms of the total assets under management as of June 30, 2020 (CRISIL report). With respect to the Quarterly Average Assets Under Management (QAAUM), UTI AMC is the eighth-largest in the country. The successor to The Unit Trust of India, the company has been active in the asset management space for more than 55 years and carries the pride of being the first mutual fund in India. The four major sponsors of UTI AMC are:

1. The State Bank of India (SBI)
2. Life Insurance Corporation of India (LIC)
3. Punjab National Bank (PNB)
4. Bank of Baroda (BOB)

UTI AMC has a huge distribution network including 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. It also has a huge Independent Financial Advisor (IFA) network of over 53,000 IFAs.

The company manages domestic mutual funds of UTI Mutual Fund, offers portfolio management services (PMS) to high-net individuals (HNIs) and institutional investors, manages retirement funds, offshore funds, and alternative investment funds. 

1. Strengths of UTI AMC

• Well-positioned to capitalize on favorable industry dynamics, including the under-penetration of mutual fund products.
• Pure-play independent asset managers with strong brand recognition and a diverse portfolio of funds and services.
• Multiple distribution channels with a wide reach and broad and stable client base.
• Long-term track record of product innovation, consistent and stable investment performance, and AUM growth.
• Established position in retirement solutions through product innovation and large retirement fund mandates.
• Experienced management and investment teams supported by strong governance structures and human resources programs.
• Enhanced profitability, driven by its size and product mix.

2. Objects of the Offer

UTI AMC proposes to utilize the net proceeds from this issue towards funding the following objects:

• Enhance the company’s brand name
• Provide liquidity to the existing shareholders
• Create a public market for its equity shares in India

3. Risk Factors

• The income and profit of the company are largely dependent on the value and composition of its AUM, which may decline because of factors outside its control like declines in the Indian equity markets, changes in interest rates, redemptions and withdrawals, changes in the composition of the AUM, declines in inflows through systematic plans, declines in the AUM of PMS, etc.
• The underperformance of its investment portfolio could lead to a loss of clients and a reduction in AUM and result in a decline in its income.
• UTI AMC has experienced a consistent decline over the past years and may continue to do so, which could have an adverse impact on its business, financial condition, and results of operations.
• Concentration in its investment portfolio could have a material adverse effect on its business, financial condition, and results of operations.
• UTI AMC’s investment performance, income and profitability may be materially adversely affected if it is unable to identify appropriate investment opportunities or if the investment strategy for any of its funds goes out of favor with its clients.
• The AMC’s business is subject to extensive regulation, including periodic inspections by SEBI and by the Pension Fund Regulatory and Development Authority (PFRDA). Any non-compliance with existing regulations or SEBI’s or PFRDA’s observations or the AMC’s failure or delay to obtain, maintain or renew regulatory approvals could expose it to penalties and restrictions.
• The company is dependent on the strength of its brand and reputation, and activities of third-party entities that are entitled to use the UTI brand may damage that brand and reputation, which may harm its business.
• Credit risks related to the debt portfolio of its funds may expose them to significant losses, which may have a material adverse effect on the AMC’s business, results of operations, and financial condition.
• Competitive pressures could cause the company to review its fees, which may reduce its income and profitability.

Important information about UTI AMC Limited

Here is a quick look at some important information about UTI Asset Management Company Limited:

1. Overview of UTI AMC’s Financials

All amounts in INR crores

2. Promoters of UTI AMC IPO

The company is a professionally managed company and does not have an identifiable promoter in terms of SEBI ICDR Regulations and the Companies Act.

Summing Up

While UTI Asset Management Company Limited is a famous name in the mutual fund industry, before investing in its IPO, ensure that you read through the company’s financials and the Red Herring Prospectus (RHP) carefully. 

Happy Investing!