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Rediff.com  » Business » Govt unlikely to sell UTI AMC stake

Govt unlikely to sell UTI AMC stake

August 08, 2005 09:38 IST

The government is likely to retain the four sponsors of UTI Asset Management Company -- Life Insurance Corporation, State Bank of India, Punjab National Bank and Bank of Baroda -- and is planning not to sell its stake in UTI AMC to a new entity or one of the four players.

Officials told Business Standard that the matter had been discussed at the highest level and a view had emerged that the sponsors should be retained.

But executives with at least two of the sponsors said they had not heard from the government on the matter.

A section of the finance ministry is of the opinion that the government should sell its stake to a third party, or one or a group of existing sponsors, as it will be able to realise a good value by doing so.

The proposal, however, did not find favour with some others as, officials said, the government had already signed an agreement with the four sponsors at the time of restructuring UTI and had even received a token sale amount of Re 1.

Once the decision on retaining the sponsors is communicated to the four sponsors, they will be asked to pay the amount arrived at after valuation of assets. Officials were unwilling to disclose the valuation of UTI AMC.

Each of the four sponsors, private banks, some non-bank finance companies and private mutual funds are eyeing UTI AMC --  the largest player with assets of Rs 22,000 crore (Rs 220 billion) at the end of June 2005, and a reach all over the country.

The government was earlier thinking of selling the assets to one of the four sponsors, but foreign holdings in the case of the SBI's mutual fund arm and PNB's deal with Principal came in the way.
Sidhartha in New Delhi
Source: