Anil Ambani sets sight on UTI Securities

Anil Ambani is targeting UTI Securities, a financial intermediary services company. His group company Reliance Capital has submitted an expression of interest to acquire UTI Securities from its parent, the Administrator of the Specified Undertaking of Unit Trust of India.

Sources close to the development said Reliance Capital submitted the EoI last week. The last day for submitting EoIs was Friday.

Reliance Capital will now start due diligence to evaluate UTI Securities. Reliance Capital executives were not available for comments.

Analysts said Reliance Capital's move was in step with Ambani's promise to establish the company as a "financial powerhouse" in the near future.

If it succeeds, the move will give Reliance Capital a foothold in major cities through the UTI Securities' network of 20 branches and 150 franchisees. Incorporated in 1994 as an institutional brokerage house, UTI Securities offers services in equity, debt markets, mutual funds and insurance products. It is also into portfolio management and depository services.

Reliance Capital has been on an acquisition spree. It bought Adlabs Films for over Rs 350 crore (Rs 3.5 billion) and AMP Sanmar (rechristened Reliance Life Insurance) for nearly Rs 100 crore (Rs 1 billion).

Led by Reliance Capital, the Anil Ambani group has been acting as a private equity fund over the past few months. It has invested in a number of companies, including Gini & Johny, Saregama and Kinetic Engineering.

ASUUTI, which has been running UTI Securities as an independent professional entity for providing financial intermediary and intermediary services to its corporate and retail clientele, has put UTI Securities up for sale. ICICI Securities (I-Sec) is the investment banker for the selloff.

Sources said Standard Chartered Bank and two PSU banks had also submitted EoIs. However, this could not be verified. Standard Chartered Bank has a joint venture with UTI Securities, Standard Chartered UTI Securities.

Engaged in primary dealership and government securities, the company has recently started commodity trading through its subsidiary UTISEC Commodities on NCDEX and MCX.

ASUUTI has been trying to sell off its equity holding in about 300-odd companies, most of which are unlisted.

An ASUUTI executive said a few institutions, including Standard Chartered Bank, Life Insurance Corporation, Bank of India and some local brokerages had earlier shown interest to acquire UTI Securities.

ASUUTI had set stiff eligibility criteria to restrict bidding to only serious players, he said. An institution has to have a minimum net worth of Rs 500 crore (Rs 5 billioN) to take part in the bidding process. He expected that the selloff would be over in one-and-a-half months.

Informed sources said Standard Chartered Bank, Citibank and two PSU banks were also in the fray.

I-Sec is the adviser to ASUUTI.