T Rowe Price, the largest stakeholder in UTI Mutual Fund, has said it is disappointed in the Indian shareholders for not taking steps to bring down their stakes to 10 per cent in order to comply with Sebi's directive.
T Rowe Price, which has been pitching hard for the initial share-sale of UTI Asset Management Company (AMC), said that the company's strong governance and management will also put it in a strong position to move ahead with the planned IPO.
"We are disappointed that the board is not taking action to ensure continuity of leadership at UTI and that the Indian shareholders are not taking steps to comply with Sebi's 10 per cent rule," T Rowe Price spokesperson said in an email response to PTI.
"Having strong governance and management in place, it is essential to protect the interests of UTI AMC and its stakeholders, including the millions of fund unit-holders. It will also put the company in the best position to move forward with the planned IPO," he added.
Further, the US-based company, which holds 26 per cent stake in the fund house, said that Leo Puri has done a stellar job managing UTI AMC since being appointed as managing director in 2013 and is "very supportive of having him continue in this role".
Puri was appointed in 2013 after the position was unoccupied for over two years. It remained headless after U K Sinha left UTI AMC to join the Sebi as its chairman.
When asked about UTI AMC's board not working towards leadership continuity and shareholders not taking enough steps to comply with the Sebi's directive, a spokesperson of the fund house declined to comment.
The markets watchdog has capped the cross-shareholding in mutual funds to 10 per cent to avoid "potential conflict of interest" and strengthen the "governance structure" of mutual funds.
As per the regulator, sponsor of a mutual fund, its associates, group company and its AMC will be restricted from holding 10 per cent or more stake in a rival AMC. Such entities will be barred from having a representation on the board of another mutual fund house.
UTI AMC, which has been planning an IPO for a long time, could become the third fund house to be listed in the country. So far Reliance AMC is the only listed company, while HDFC AMC has already filed draft papers with regulator.
Earlier, UTI AMC had filed draft papers with the Securities and Exchange Board of India (Sebi) in 2008 but could not hit the capital markets.
UTI MF has an assets base of Rs 1.55 lakh crore and is the sixth-largest in terms of assets under management behind ICICI Prudential AMC, HDFC AMC, Reliance Nippon Life AMC, Birla Sun Life AMC and SBI MF.
The fund house's public issue may allow partial exit for four sponsors -- State Bank of India, Life Insurance Corporation of India, Bank of Baroda and Punjab National Bank -- which own 18.24 per cent each in it -- and T Rowe Price.
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