SBI, LIC, two other sponsors to dilute stake in UTI Mutual Fund

New Delhi: Sponsors of UTI Mutual Fund, including SBI, Punjab National Bank and Life Insurance Corporation of India, have initiated the process to dilute their stake in India’s oldest fund house.

According to sources, these entities have approached merchant bankers to advise on stake sales.

UTI Mutual fund is promoted by the State Bank of India (SBI), Life Insurance Corporation of India (LIC), Punjab National Bank (PNB) and Bank of Baroda (BoB), having a combined holding of 45.21 per cent in the paid-up capital.

US-based T Rowe Price Group Inc through its wholly-owned subsidiary T Rowe Price Global Investment Services Ltd (UK) presently holds a 23 per cent stake in UTI Asset Management Company Ltd (UTI AMC).

These sponsors diluted their stake through an initial public offering (IPO) in 2020 by selling 38,987,081 shares for Rs 2,100 crore. The entire proceeds of the offer went to all the promoters, including T Rowe Price.

The IPO came after the markets regulator Sebi order dated December 6, 2019, directing LIC, SBI and BoB to reduce their stake by December 2020, failing which, the regulator would freeze their excess voting rights.

Last year, PNB received government approval to divest its entire stake in UTI Asset Management Company Limited as part of its non-core asset sale plan to shore up its capital base.

DIPAM, last year, allowed Public Sector Enterprises (PSEs) wanting to divest stake in their subsidiaries to submit the proposal to their respective administrative

ministries.

Earlier, the sale of majority or minority stakes in subsidiaries or units of PSEs was undertaken by the Department of Investment and Public Asset Management (DIPAM).