UTI ASSET MANAGEMENT COMPANY LTD IPO – ALL YOU WANT TO KNOW
Along with Mazagon Dock, another IPO of UTI AMC is hitting the bourses. I am highlighting all the necessary points an investor needs to know regarding this UTI AMC issue. Should you subscribe or give it a miss? Do read on.
UTI Asset Management Company Limited
Issue Period Bid/Offer Opens On: Tuesday, 29th September, 2020*
Bid/Offer Closes On: Thursday, 1st October, 2020
*The Anchor Investor Bidding Date shall be 28th September, 2020
Issue Details Offer for Sale of upto 38,987,081 Equity Shares
Issue Size (₹ Cr) ₹ 2,152 Cr - ₹ 2,160 Cr
Price Band ₹ 552 - 554
Bid Lot 27 Shares and in multiple thereof
Employee Reservation 2,00,000 Equity Shares of Face Value ₹ 10
Issue Structure :
QIB 50% of the net offer ( 1,93,93,540# Equity Shares ) (₹ 1,071~Cr - ₹ 1,074^ Cr)
NIB 15% of the net offer ( 58,18,062# Equity Shares ) (₹ 321~Cr - ₹ 322^ Cr)
Retail 35% of the net offer ( 1,35,75,479# Equity Shares ) (₹ 749~Cr - ₹ 752^ Cr)
# Number of Equity Shares as per mentioned in RHP
~ Lower price band and ^ Upper Price Band
BRLMs Axis Capital, Kotak Mahindra Cap, Citigroup Global, DSP ML, ICICI Sec, JM Financial,
SBI Capital Markets
Registrar KFin Technologies Pvt. Ltd.
- Finalization of the basis of Allotment – 07-10-2020
- Refunds/Unblocking ASBA – 08-10-2020
- Credit of Equity Shares to Demat – 09-10-2020
- Listing on BSE and NSE – 12-10-2020
Pre and Post Issue Share-holding Structure
Offer of sale upto 3,89,87,081 equity shares
Offer of Sale Breakup Pre Offer Post Offer
Promoters No of Equity Shares % of Equity Share Capital Offer For Sale No of Equity Shares % of Equity Share Capital
State Bank of India 23125000 26.00% 10459949 12665051 9.99%
LIC 23125000 18.24% 10459949 12665051 9.99%
Bank of Baroda 23125000 18.24% 10459949 12665051 9.99%
Punjab National Bank 23125000 18.24% 3803617 19321383 15.24%
T Rowe Price International 32964686 18.24% 3803617 29161069 23.00%
TOTAL 125464686 98.96% 38987081 86477605 68.21%
The offer shall constitute 30.75% of fully diluted post offer equity share capital
GMP of UTI AMC and other Key Points
- If I had to write one headline for UTI AMC IPO, it will be ” A fallen giant”. There was a time when Mutual Fund and UTI were synonymous. But with the advent of Private and Global AMCs, UTI has lost its shine.
- UTI AMC established the first mutual fund in India and has been in the asset management industry for more than 55 years with a strong history and proven track record in mutual fund mutual industry with strong brand recognition.
- They have SBI, LIC, BOB, PNB as their promoter. So, UTI receives funds from PSUs. Most PSUs invest in corporate debt funds every quarter for their cash management requirements.
- UTI is the second-largest asset management company in India in terms of Total AUM and the eighth largest asset management company in India in terms of mutual fund QAAUM (Quarterly Average AUM) as of June 30, 2020, according to CRISIL.
- UTI has a presence in may lower-tier cities as they have a strong distribution network.
- UTI AMC has 11 million live folios accounting for 12.8% of the client base managed by the Indian mutual fund industry.
- The Sponsors’ shareholding in Equity Shares will be diluted after the Offer and they will own less than 51% of the outstanding shares, which may adversely affect their ability to gain and retain Government business.
- Asset Management is a very good business for days to come when more and more people will try to have a bite at the financial markets. It has a capital-light model as we can see in the Balance sheet that the company does not have any debt. Fund Manager will get their payment as a percentage of incoming proceeds into the fund.
- The management fees from domestic mutual funds account for 72.7% of the total income of the company.
- AMC companies generally demand high PE due to high ROE and high ROCE. But PE is a subset of growth and I can hardly see any growth in the UTI AMC profitability. Profit and EPS is on a downward slope YoY. They have conceded the market share to private players.
- The issue is cheaply priced as it provides the room for an upside rally. But in order to get the market valuation, UTI has to show growth, which is missing at the moment.
- Grey Market Premium (GMP) of UTI AMC is around 5-10% which is very poor. Market punters are not upbeat with this IPO.
- I am not expecting any listing gain in this IPO.
- My view is, Skip UTI AMC IPO.
- In AMC space, HDFC AMC is the best stock for investment.
Read the Mazagon Dock IPO analysis here . Mazagon Dock IPO is a Must Subscribe and 2X candidate on listing.
Source – RHP, JM Fin Research Report