Officials close to the development have received internal approvals and Tata has received an in-principle nod from another major investor in AMC – global investment management firm T Rowe Price Group, which holds around 23%. ET first reported in August this year that Tata UTI was interested in acquiring AMC. If the deal goes through and Tata AMC and UTI AMC merge, the combined entity will become the fourth largest asset manager in India.
SBI AMC, AMC and are the top three in the list.
Two entities of the Tata Group – Tata Sons and
They own 68% and 32% in Tata AMC.
UTI AMC, which listed in October 2020, commanded a market capitalization of Rs 9,791 crore on Friday. At the current market price, Tata Group will have to pay around Rs 4,400 crore to buy a 45% stake in UTI AMC and another Rs 2,500 crore for a 26% mandatory open offer.
As on September 30, UTI AMC’s assets under management (AUM) stood at Rs 2.34 lakh crore or about 6% of the total AUM. Tata AMC, the 12th largest by AUM, managed assets of Rs 91,284 crore as on 30 September.
UTI AMC has no sponsors and no promoters like LIC, PNB, SBI and BOB. T Rowe Price Group had a 22.97% stake in T Rowe Price International as of September 30.
Tata AMC, LIC, SBI, PNB and BOB did not respond to queries.
UTI AMC posted a net profit of Rs 534 crore on revenue of Rs 1,319 crore in FY22. Tata AMC reported revenue of Rs342 crore and net profit of Rs103 crore in FY22.
Earlier this year, PNB said it wanted to monetize its non-core assets, which included selling its stake in UTI AMC. In October 2020, the lender sold its 3% stake in UTI AMC for Rs 180 crore, reducing its ownership to 15.22%.
In December 2019, the Securities and Exchange Board of India (Sebi) directed LIC, SBI and BOB to reduce their stake in UTI AMC by December 2020. These three public sector financial institutions then held 18.24% each, as Sebi’s cross-border rules for mutual funds do not allow a sponsor of one AMC to hold more than 10% in another. Subsequently, the trio reduced their stake to less than 10 percent during the October 2020 IPO.
The latest M&A deal in the £38 crore mutual fund industry was by a consortium comprising Bandhan Financial Holdings Ltd;
and ChrysCapital, Mutual Fund acquired for £4,500 crore. In December last year, HSBC AMC was acquired by R&T Investment Management for Rs 3,200 crore. Baroda Property Management recently merged with Property Management India.
In a small contract,
AMC acquired around Rs 340 crore of prime asset management assets last year.