UTI AMC IPO

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(i) UTI AMC, India’s most trusted Wealth creators and always has the interest of its investors in its heart. UTI AMC has completed 50 years as India’s leading Financial service institution and was the sole vehicle of capital market investment for Indian Citizens till the early ’90s. The institution has shown great resilience and has grown from strength to strength overcoming economic turbulence and global turnarounds.

(ii) UTI has contributed immensely to industrial and capital growth in the Indian market. It has led to transformative initiatives like developmental financial institutions, rural outreach programs, and financial products and services.

(iii) UTI AMC has assets under management across different businesses which include Domestic mutual fund, Portfolio Management Services, International Business, Retirement Solutions, Venture Funds, and Alternative Investment assets.

(iv) UTI AMC is today a household name in India and has a wide portfolio to suit the varied needs of investors supported by industry-led best practices, long-term vision, and shareholder values. With 150 branches, 47,000 highly trained IFAs, 320 Chief Agents and Business Development Associates, and over 1 crore investor accounts, UTI AMC is one of the leading financial institutions with a pan Indian presence.

As of 31.08.2020, the company is currently having an AUM of 155467 Crore.

How does UTI AMC make money?

They charge management fees from the clients to manage their funds. So, the larger the size of AUM(Asset Under Management), the more the revenue they get. And there are two types of funds they manage, Equity and Debt. Fee levels for equity and hybrid funds are generally higher than the fee levels for income and liquid and money market funds and fee levels for active funds are generally higher than fee levels for passive funds. In general, UTI AMC charges relatively stable fees for equity funds, whereas fees for debt funds vary significantly depending on market conditions as well as fund duration and type of fund.

Objects of the UTI AMC IPO:

The objects of the Offer are to achieve the benefits of listing the Equity Shares on the Stock Exchanges and the sale of up to 38,987,081 Equity Shares by the Selling Shareholders in the Offer. SBI, LIC, and Bank of Baroda are selling 10,459,949 Equity shares each, and T Rowe Price and Punjab National Bank are selling 3,803,617 Equity shares.
DRHP of UTI AMC IPO

UTI AMC IPO Details:

Open Date: Sep 29 2020
Close Date: Oct 01 2020
Total Shares: 38297872
Face Value: ₹ 10 Per Equity Share
Issue Type: Book Building
Issue Size: 2160 Cr.
Lot Size: 27 Shares
Issue Price: ₹ 552-554 Per Equity Share
Listing At: NSE,BSE
Listing Date: Oct 12 2020

Promoters And Management:

State Bank of India, LIC, Bank of Baroda, Punjab National Bank,and T.Rowe Price International lImited are the principal shareholders in the company.
Shareholders No. of Shares (Cr) %
State Bank of India 2.3125 18.24%
Life Insurance Corporation of India 2.3125 18.24%
Bank of Baroda 2.3125 18.24%
Punjab National Bank 2.3125 18.24%
T. Rowe Price International Limited 3.2965 26%

Financials of UTI AMC IPO:

Particulars (In Crores) 2020 2019 2018 2017 2016
Gross Income 890 1008 1018 853 749
Gross Expense 554 515 537 452.7 407.29
PBT 345 492 481 398.5 341.82
TAX 68 143 140 107.7 109.77
PAT 267 348 341 290 232.05
EPS 21.53 27.48 26.93 22.94 18.33
Paid-up Capital 126.79 126.79 126.79 126.79 126.79
Net Worth 2773 2407 2172 1890 1578

Comparison With Peers:

Company FV Share Price Mcap (Cr) AUM (Cr) Mcap/AUM
Reliance Nippon 10 282 17,314 2,00,867 8.60%
HDFC AMC 5 2143 45621 3,80,372 12.10%
UTI AMC 10 554 6517 1,55,647 4.18%

Recommendation on UTI AMC IPO:

Review and Recommendation of InvestorZone are 5/10. 1. The AMC business in India is highly under-penetrated as compared to other global countries. AUM/GDP is just 11% in India as compared to the 65% global average. The millennials are putting a lot of money in Mutual funds as a preferred investment. 2. The competition is very tough and a lot of new players are getting a mutual fund licenses. And moreover, the management fees they charge to manage funds keep on declining. 3. The management of the company is still not private. T Rowe Price in past was not happy with the management team of UTI AMC. So, unless T Rowe Price gets the majority stake in UTI AMC, stakeholders have to manage the government elected board members. For this to happen, an open offer is required in the future. 4. The AUM is continuously declining over the years. This has resulted in a decrease in revenue. 5. The valuation at which shares are offered is very attractive as compared to peers like HDFC and Nippon India. 6. Listing gain of 20-25% possible in UTI.

Lead Manager of UTI AMC IPO:

  1. ICICI Securities Limited
  2. JM Financial Consultants Private Limited
  3. SBI Capital Markets Limited

Registrar of UTI AMC IPO:

  1. Kfin Technology Private Limited

Discussion on UTI AMC IPO:

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