Tata in talks to buy majority stake in UTI AMC from 4 PSU finance entities

The Tata Group is looking to buy a majority stake in India’s eighth largest mutual fund UTI Asset Management Co (AMC). The group is in final stages of negotiation to buy the stake from four state-owned financial entities — Punjab National Bank, Life Insurance Corporation of India, State Bank of India, and Bank of Baroda – which together own 45.16 per cent stake in UTI AMC.

According to a report in The Economic Times, a final agreement is being sought on the deal valuation. People privy to the development said the internal approvals are in and the Tata Group has received in-principle nod from the other big investor in AMC — global investment management firm T Rowe Price Group, which holds around 23 per cent.

If the deal goes through, Tata AMC and UTI AMC’s combined entity could become the fourth-largest asset manager in India, said the report. SBI AMC, ICICI Prudential AMC, and HDFC AMC are the top three in the list.

Tata Sons and Tata Investment Corporation are two Tata Group entities that own 68 per cent and 32 per cent, respectively, in Tata AMC.

UTI AMC, which was listed in October 2020, commanded a market capitalisation of Rs 9,791 crore on Friday. At current price, Tata Group will be required to pay nearly Rs 4,400 crore to buy a 45 per cent stake in UTI AMC and another Rs 2,500 crore for the 26 per cent mandatory open offer.

UTI AMC has no promoters but has sponsors such as LIC, PNB, SBI and BOB. T Rowe Price Group held a 22.97 per cent stake on September 30 through T Rowe Price International.

In FY22, UTI AMC posted a net profit of Rs 534 crore on revenue of Rs 1,319 crore, whereas, Tata AMC posted revenue of Rs 342 crore and net profit of Rs 103 crore.