UTI AMC puts off IPO plans

Mumbai: India's fourth largest mutual fund UTI Asset Management has deferred plans for its estimated $480-million public offer with falling stocks hitting investor sentiment hard.

The company joins the ranks of ICICI Securities, JSW Energy, and Vedanta Energy, among others, who have decided to rethink their IPO plans given the dampened market spirits. The Indian unit of Dubai's Emaar Properties EMAR.DU had also withdrawn its IPO.

Indian bourses have slumped by almost 23 per cent over the course of the past seven weeks, marking the longest rally of weekly losses in the last seven years. Given these circumstances, UTI AMC has decided to err on the side of caution, as it could not be confident of an enthusiastic response to its share sale. Reuters quoted unnamed sources at UTI confirming that the proposed sale, which was to be launched by 22 July according to regulator SEBI's approval, stands deferred.

UTI manages around $12 billion in assets, and was planning to offload almost 49 per cent through a stake sale by its founders accompanied by a fresh issue of shares, in a price band between Rs270-320 per share.

Private placement of shares was to precede the mid-July sale. Nationalised banks such as the State Bank of India, Punjab National Bank, and Bank of Baroda, along with government-owned insurance company Life Insurance Corporation hold around 25 per cent of UTI, and were proposing to offload around 48.5 million shares, totalling 35 per cent of equity, for up to around $360 million. UTI was hoping to collect another $120 million by issuing fresh shares.

The 30-share BSE index dropped around eight per cent in the past two weeks because of record high oil prices, increasing interest rates, and the 13-year high in the country's inflation record. It had slipped 18 per cent last month, which was it steepest fall in 16 years. Overall, the index is down by almost a third this year.

The company has twice earlier deferred its IPO plans on account of market volitality. This time, it joins a larger group of 160 companies who have decided to rethink their IPOs this year, such as the multi commodity exchange MCX India, public sector power companies National Hydro Power Corporation (NHPC), and the Rural Electrification Corporation (REC), developer Emaar MGF Land Ltd..
 
UTI AMC had planned the share sale after the BSE Sensex rose 47 per cent last year, becoming the best performing bourse in Asia after China and Bangladesh.